Wednesday, May 28, 2008

HK new mortgages up 67% as low rates fuel demand

Hong Kong's new mortgages rose 67 percent in April as lower interest rates fueled demand for loans. Banks in Hong Kong approved HK$24.2 billion (US$3.1 billion) of new mortgage loans in April, the Hong Kong Monetary Authority said today, up from HK$14.5 billion a year ago.

The city's biggest banks cut borrowing costs four times during the second half of last year, spurring demand for loans to buy properties, Joe Lo, a senior economist at Citigroup Inc., said Monday. New home-loan growth is likely now to slow as the lenders signal they would stop lowering interest rates, he said. "Rate cuts have come to an end, making homebuyers more cautious," Lo said by telephone from Hong Kong.

Hong Kong's biggest banks, including HSBC Holdings Plc., didn't follow the U.S. Federal Reserve in lowering interest rates earlier this month.

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