Global financial trends in November
In addition to paying attention to the US election, another important news is the US Federal Reserve's interest rate cut. At the November interest rate meeting, the Federal Reserve cut interest rates by 0.25% as expected by the market. Subsequently, various banks in Hong Kong also successively announced that they would follow the interest rate cut and lower the prime rate by 0.25%, thus reducing the actual mortgage interest rate to 3.625%. Originally, the market expected that Hong Kong banks would not react "so quickly" by adjusting interest rates, but cutting interest rates so quickly is naturally a good thing for the overall property market development and property owners.
On the other hand, there is still a chance of another 0.25% cut in December. With the interest rate cut starting so quickly, how should people who are “getting on the train” or those who are changing their homes plan their plans?
The actual interest rate dropped to 3.625%
For people who are "getting on the bus", the most direct impact of the interest rate cut is naturally the reduction of monthly payments and the lowering of the threshold for getting on the bus. Based on an interest rate of 3.875% and 3.625%, a loan of NT$5 million and a repayment period of 30 years, the monthly repayment is reduced from NT$23,512 to NT$22,803, saving NT$709 per month. The income requirement for applicants will also be reduced from NT$47,024 to NT$45,606. It can be expected that when interest rates are further reduced in the future, the current property prices have corrected to a certain extent, and their attractiveness to investors will also greatly increase. Market trading volume will gradually increase, which will help stimulate a steady rise in property prices.
Advice you need when buying a property
Therefore, if you are in need of buying a property, you can enter the market when the property price has not yet increased significantly to lock in the property price at the time of purchase. For those who are looking to change flats, they are faced with the same situation as those who need to buy a home. They should first lock in the property price. Once the property price rises sharply within a few months, it may greatly affect the plan to change flats. One less room".
Fixed rate mortgage plan options
Some readers have asked whether they should choose a fixed-rate mortgage plan after the interest rate cut cycle begins. Currently, many banks offer short-term fixed-rate mortgage plans, and the mortgage interest rates are quite attractive. Coupled with the short lock-in interest rate, once the interest rate changes after two or three years, the owner can also arrange a new mortgage plan through remortgage to adapt to the new market changes, which is a feasible option.
Mortgage options during the interest rate cut cycle
If you are confident that interest rates will continue to be cut in the future, you can choose Hong Kong Interbank Offered Rate (H-mortgage). The reason is that during the interest rate cut cycle, H-mortgage will fall more than the prime interest rate (P-mortgage), and you can respond to market changes faster. Reduce payment pressure.
Pay attention to banks’ updated mortgage offers
As the market enters an interest rate cut cycle and the new year is about to begin, banks may continue to offer mortgage discounts in order to catch up with mortgage performance, such as reintroducing high-interest Mortgage Link accounts or increasing cash rebates. Therefore, whether you are buying a mortgage or changing a mortgage, you should apply to different banks for comparison before entering the market. You can also seek help from a reputable mortgage referral company to grasp the latest mortgage information in the market and strive for the most discounts.