Assess Risk Posed By Rate Hikes, HKMA Warns

The chief executive of the Hong Kong Monetary Authority (HKMA), Eddie Yue, on Thursday called on prospective home-buyers and those planning to take out bank loans to carefully assess the risk posed by increasing borrowing costs.

He was speaking after the US Federal Reserve increased its benchmark interest rate by three-quarters of a percentage point, to curb inflation.

Yue noted that Hong Kong’s interbank rates are slowly going up, and some banks had already raised the interest rate cap for newly approved mortgages.

“As the Hong Kong dollar interbank rates continue to rise and gradually track the US dollar interbank rates, banks may also adjust their deposit and lending interest rate, including the best lending rate,” he said.

“The public should carefully assess and manage the relevant risks when making property purchases, taking out mortgages or making other borrowing decisions.”

The head of the HKMA added, however, that the US rate hike cycle will not affect the monetary and financial stability of the SAR.

“The link exchange rate system remains robust over the years, having weathered different interest rate cycles,” he said.