By Enoch Yiu

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Hong Kong’s three note-issuing banks – HSBC, Standard Chartered and Bank of China (Hong Kong) – will trim their prime lending rates for the first time since December, reducing funding costs and providing some relief to businesses and mortgage borrowers in the city.
HSBC and the Hong Kong unit of Bank of China said on Thursday that they would drop their prime lending rates by 12.5 basis points to 5.125 per cent – effective on Friday at HSBC and on Monday at BOCHK. Standard Chartered said it would cut its prime rate by the same margin to 5.375 per cent from Monday. All three said in separate statements that they would cut their savings rate by the same margin to 0.125 per cent.
Other lenders are expected to announce their rate decisions later on Thursday.
The banks’ moves came after the Hong Kong Monetary Authority (HKMA) earlier on Thursday reduced its base rate by a quarter point in lockstep with the overnight cut by the US Federal Reserve. While the HKMA follows the Fed’s moves under the peg-linked system, Hong Kong’s commercial lenders decide their own prime lending and deposit rates.
“We believe the adjustments announced today are appropriate considering the US rates decision and the local market conditions,” HSBC’s Hong Kong CEO Luanne Lim said in a statement.
“Including this reduction, HSBC has lowered its Hong Kong dollar best lending rate by 75 basis points in this rate-cut cycle since September 2024,” she said. “We will continue to monitor the external environment and local economic outlook, and adopt an agile approach when we evaluate future rate decisions.”
The first reduction of the prime rate this year will help mortgage borrowers who enjoy the banks’ best rates. For a HK$5 million, 30-year loan priced at prime minus 1.75 per cent, a 12.5-basis-point rate cut reduces the effective mortgage rate to 3.375 per cent, reducing the monthly payment by HK$347 to HK$22,105, according to mReferral, a mortgage broker.
Hong Kong homebuyers had HK$1.887 trillion in outstanding mortgage loans with banks as of the end of July, with an average mortgage size of HK$4.51 million, according to the HKMA’s data.
“Even though the rate cut is small, it will still be positive to property market sentiment,” said mReferral’s chief vice-president, Eric Tso Tak-ming.

The one-month Hong Kong interbank offered rate (Hibor), which is used to price many mortgage loans, has not dropped with the HKMA rate cut. It rose to 3.3608 per cent on Thursday from 3.2117 per cent a day earlier – much higher than its low of 0.5 per cent in June after the HKMA intervened in the market to maintain the US dollar peg and crack down on carry-trade activity.
The three-month Hibor, which is linked to many corporate loans, rose to 3.3982 from 3.2975 per cent a day earlier and 1.5409 per cent in late June, according to data published by the Hong Kong Association of Banks.
Hong Kong banks have trimmed their prime rate three times between September and December by a combined 62.5 basis points.