In announcing its latest policy decision, the U.S. central bank scaled back to a quarter-percentage-point rate increase after a year of larger hikes and Fed Chair Jerome Powell suggested a "couple" more hikes coming. "The rate hike cycle in the U.S. has not yet completed, the Hong Kong dollar interbank rates might remain at elevated levels for some time," Yue said. However, HSBC Holdings said it was leaving its best lending rate in Hong Kong unchanged at 5.625%, despite a raise by the city's de facto central bank. Hong Kong is facing risks from high inflationary pressure and aggressive monetary tightening in advanced economies. Higher borrowing costs and a pessimistic economic outlook have hit asset prices, dragging 2022 private home prices down 15.6% in the first annual drop since 2008.
Cases of negative equity in the city's residential mortgage loans jumped nearly 22 fold in the fourth quarter from the previous one, as home prices continued to fall during the period. HKMA said the surge in negative equity mortgage cases was "controllable", urging the public to prepare for the likelihood that bank lending rates might go higher and that homebuyers should be prudent in making borrowing decisions. (Reporting by Donny Kwok; Editing by Chris Reese, Jacqueline Wong and Raissa Kasolowsky)
Messaging: donny.kwok.reuters.com@reuters.net))