Sunday, June 28, 2009

The Debts of the Lenders: Hong Kong Slashes Mortgage Rates to Lowest in 19 Years

Hong Kong is notorious for having some of the most overpriced property in the planet. But apparently, policy makers are intent on re-inflating the bubble again. Perhaps they should read an economic textbook or better yet, apply some common sense and realize that not everyone is able to afford a home. Home ownership is a privilege - not a right. If you are too poor to afford an apartment or house, then rent.

I find the last paragraph particularly amusing (emphasis my own).

Mortgage rates in the city are the lowest in at least 19 years, as far back as records are available, to offset slower demand for other types of credit during Hong Kong’s worst recession in a decade. Among developed economies, only Japan offers similarly cheap loans, as its central bank has kept interest rates below 1 percent for the past 14 years, said Leland Sun, founder of Pan Asian Mortgage Co.

“Hong Kong banks are killing themselves with the low rates,” said Sun, whose Hong Kong-based firm advises homebuyers.

“With these kinds of mortgage rates, banks aren’t really making much money,” said Dominic Chan, a Hong Kong-based analyst at BNP Paribas Securities Asia Ltd. “But for them it’s probably still better than putting money in, say, U.S. Treasury notes.”

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