Concrete Analysis | Here’s what Hongkongers need to know about cash rebates on mortgage transfers
- Borrowers can save HK$84,000 by enjoying a 2.1 per cent cash rebate on a HK$4 million on mortgage transfers to HSBC
- HSBC is reducing the cash rebate to 1.5 per cent as it looks to restore the normal profit margin on mortgages, with other banks following suit
HSBC’s abrupt and drastic cut in cash rebate on mortgage refinancing from 2.1 per cent to 1.5 per cent last month startled the mortgage industry.
Assuming an average loan size of HK$4 million (US$511,000), the borrower would now get HK$24,000 less cash rebate for refinancing at HSBC.
Refinancing has grown by leaps and bounds in recent years. According to data from the Hong Kong Monetary Authority, refinancing accounted for nearly 30 per cent of total mortgages approved in May. Over the past three years, the steady decline in mortgage rates and the sharp increase in cash rebate has made refinancing a valuable tool for borrowers who wish to save a bundle.
So, what exactly is mortgage refinancing?
As simple as it sounds, it refers to the replacement of an existing mortgage with a new mortgage in a new bank. Reasons homeowners refinance vary, with obtaining a lower interest rate and cash rebate being the greatest incentives.
