Mortgage Market Index Rises 3 Basis Points, HIBOR Drops to 1.19%

The Mortgage Market Index (MMI) for April 2023 has been reported at 3.54%, showing a marginal increase of 3 basis points from the previous month. This index is a key indicator of the general mortgage interest rates available to new customers. According to the chief vice president of a leading mortgage brokerage firm, Cao Deming, the MMI has been hovering around the 3.5% mark due to the consistent mortgage interest rates offered by major banks in the region for new housing loans and personal loans. However, the firm anticipates that the MMI could potentially decrease to 3% by the next quarter, driven by an oversupply of funds in the banking system.

Cao Deming noted that the Hong Kong Monetary Authority's interventions in the market, which have occurred four times this month, have led to an increase in the banking system's total surplus liquidity to 174 billion Hong Kong dollars. This influx of hot money has caused a rapid decline in the one-month Hong Kong Interbank Offered Rate (HIBOR), which stood at 1.19% as of May 19, marking a two-day consecutive drop and reaching its lowest level since July 25, 2022.

Cao Deming further explained that if the demand for the Hong Kong dollar remains robust, the banking system's total surplus liquidity is likely to stay above 100 billion Hong Kong dollars. Consequently, the HIBOR is expected to continue fluctuating within the 1% to 2% range, which could facilitate the MMI's decline to 3% in the next quarter. This analysis underscores the interconnected nature of interest rates, liquidity, and market demand, providing a comprehensive view of the factors influencing mortgage rates in the region.