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HK banks, developers offer sweeteners after rate increase

Hong Kong

BANKS and developers in Hong Kong are offering homebuyers cash rebates and discounts just a week after mortgage rates rose, in the latest sign the city's red-hot housing market is cooling.

BOC Hong Kong (Holdings) and CMB Wing Lung Bank are offering rebates of up to 2 per cent of the loan value for new-home mortgages, the Hong Kong Economic Times reported on Thursday, citing unidentified sources.

Citigroup is said to have lowered the cap for its Hibor-linked mortgage rate by 10 basis points, the newspaper said.

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The moves come after lenders in the city last week raised their best lending rates for the first time in more than 12 years, heralding the end of ultra-low rates that had helped fuel a property boom and made the city one of the world's most expensive places to buy a home.

Developers are also offering perks to attract buyers. Lai Sun Development Co cut the price of some units at its Monti project by 10 per cent on Wednesday, and is giving buyers furniture vouchers worth as much as HK$120,000 (S$21,120).

Vanke Property (Hong Kong), the local arm of China Vanke, is offering buyers at its Le Pont development in the New Territories mortgages between 10 basis points and 20 basis points below market rates, and cash rebates of as much as 1.95 per cent of the mortgage amount.

Rising interest rates and increasing supply over the next two years have prompted developers to speed up sales ahead of a vacancy tax that will penalise firms for holding onto empty apartments.

"The cooling measures carried out by the government earlier this year have heightened the cost of keeping inventory for developers, so they need this kind of marketing campaign to attract buyers," said Thomas Lam, an executive director at Knight Frank.

Hong Kong's property market is already showing signs of slowing after prices more than quadrupled since 2003.

The number of transactions in the secondary market slumped 32 per cent in September from the previous month to a 30-month low, according to Centaline Property Agency. New-home transactions fell 16 per cent last month. BLOOMBERG