Hong Kong Banks, HSBC and Bank of China, Initiate First Prime Rate Cut in 5 Years to Support Local Businesses and Mortgage Borrowers

Banks in Hong Kong have reduced their prime rates by 0.25 points, marking the first decrease in the cost of funds in half a decade. HSBC and the Bank of China (Hong Kong) have spearheaded this reduction by decreasing their prime lending rates by 0.25 points. This is the first time Hong Kong's banks have lowered their rates since 2019.

The biggest commercial banks in Hong Kong have cut their prime lending rates for the first time in nearly five years. This move aims to lower their financing costs and assist local companies and individuals with mortgages.

HSBC announced that its primary lending rate will decrease by 0.25 percentage points to 5.625% beginning Friday. Similarly, the bank's savings rate will also drop by 0.25 percentage points, resulting in a new rate of 0.625% annually for deposits over HK$5,000 (US$640). However, accounts holding less than this amount will not accrue any interest.

The Bank of China (Hong Kong) has announced a cut in the loan rate for its premium clients to 5.625 per cent, starting from September 23, as per a released statement.

Today, the Hong Kong Monetary Authority (HKMA) reduced its base rate by 0.50%, following the U.S. Federal Reserve's similar reduction. This decision promptly influences the Hong Kong-dollar interbank offered rate (Hibor), determining the funding cost among the city's banks.

"The choice to lower our interest rates on the Hong Kong dollar is a response to the US Federal Reserve's recent declaration as well as the consistent decrease in Hibor from the start of this year," stated Luanne Lim, HSBC's chief executive in Hong Kong. "After evaluating the overall economic conditions and the pattern of Hibor, we deemed a cut was suitable. We will persist in tracking the shifting macroeconomic landscape and fluctuations in the financial markets, prepared to modify our rates as necessary."