Best Mortgage Loans 2020

We've analysed hundreds of data points from top banks and lenders in Hong Kong to help you find the best mortgage options available. When comparing the interest rates below, it's important to consider the affordability of the monthly payment, the total cost of borrowing, and any additional factors like cash rebates or prepayment penalties.

Best Private Housing Mortgages

As some of the most desirable flats in the world, privately built apartments in Hong Kong can be quite expensive. Therefore, it is crucial to find an affordable home loan to keep your monthly mortgage costs reasonable. Our research suggests that private housing mortgages have an average interest rate of approximately 2.53%; however, the options below only charge 2.45%–2.50%. While this may not seem like a lot, these lower interest rates can add up to more than HK$37,000 in savings throughout the tenure of a 25-year, HK$3 million mortgage.

Best Private Housing Loan Rates

Loan NameInterest RateExpected Monthly PaymentTotal Interest CostCash Rebate
BOCOM HIBOR Mortgage Plan2.45%HK$13,384HK$1,014,9261.3%
BOC HIBOR Mortgage Scheme2.5%HK$13,459HK$1,037,5511%
CNCBI HIBOR-Based Mortgage Plan2.5%HK$13,459HK$1,037,5511%
NCB Residential Mortgage Loan2.5%HK$13,459HK$1,037,5511%
BEA HIBOR Mortgage Plan2.5%HK$13,459HK$1,037,5511.2%
Figures based on a HK$3 million loan with a tenure of 25 years (sorted by total interest cost)

Our analysis suggests that the mortgages listed above are the least expensive loans available in Hong Kong. While many mortgages also offer a 2.50% interest rate, the home loans listed above offer more generous cash rebates or other welcome gifts like special offers for fire and household insurance. Some mortgages providers like BOC and NCB even waive annual credit card fees for mortgage account holders. To apply for one of these loans, simply contact these lenders using the links above.

Best Public Housing (HOS) Mortgages

The Home Ownership Scheme (HOS) is the primary way that Hong Kong has addressed the issue of rising home prices. For instance, these flats are approximately 41% less expensive than privately built apartments. However, homeowners can further reduce their costs by obtaining the best mortgage rate. For example, a HK$3 million, 25-year mortgage at the average interest rate of 2.56% would cost about HK$13,549 per month. By using one of the least expensive HOS mortgages available, can lower this monthly payment to HK$13,383, saving more than HK$49,000 in total interest costs over the duration of the loan.

Top Public Housing (HOS) Mortgage Rates

MortgageInterest RateExpected Monthly PaymentTotal Interest CostCash Rebate
BOCOM HIBOR Mortgage Plan2.45%HK$13,384HK$1,014,9261.3%
BEA HIBOR Mortgage Plan2.5%HK$13,459HK$1,037,5511.2%
CCB Home Mortgage Loan2.5%HK$13,459HK$1,037,5511%
BOC HIBOR Mortgage Scheme2.5%HK$13,459HK$1,037,5511%
CNCBI HIBOR-Based Mortgage Plan2.5%HK$13,459HK$1,037,5511%
Figures based on a HK$3 million loan with a tenure of 25 years (sorted by total interest cost)

On average, HOS mortgages typically offer annual interest rates of 2.53%. However, it is important to note that public housing loans typically have lower application and cancellation fees than private housing loans. HOS mortgages also usually have lower prepayment penalties than private mortgage counterparts.

Best Mortgages for Village Houses

If you're interested in purchasing a village house, it's crucial that you first compare interest rates to avoid overpaying. Our research suggests that the average interest rate for mortgages for village houses is approximately 2.54%, although we've found several loans offering lower rates. Given a HK$3 million 25-year loan, you can save nearly HK$40,000. However, since many village houses are significantly more expensive, those taking out large loans can save even more money by choosing one of the best interest rates available.

Top Village Housing Mortgage Rates

MortgageInterest RateExpected Monthly PaymentTotal Interest CostCash Rebate
BOCOM HIBOR Mortgage Plan2.45%HK$13,384HK$1,014,9261.3%
CNCBI HIBOR-Based Mortgage Plan2.5%HK$13,459HK$1,037,5511.2%
BOC HIBOR Mortgage Scheme2.5%HK$13,459HK$1,037,5511%
Hang Seng Bank HIBOR Mortgage Plan2.5%HK$13,459HK$1,037,5511%
NCB Residential Mortgage Loan2.5%HK$13,459HK$1,037,5511%
Figures based on a HK$3 million loan with a tenure of 25 years (sorted by total interest cost)

Given the generally high price of village houses compared to other properties, finding a loan with a low interest rate is even more important. The market for village houses is also much smaller than that of private or public housing flats, and complicated usage terms and land premium payments can make the purchasing process even more difficult. Nonetheless, taking out one of the low-cost mortgages above allows you to enjoy notable savings over the life of the loan.

Best Interest Rates for Large Mortgages

If you're looking to settle down in a more expensive home, you may want to consider the following mortgages, which offer preferential rates for larger loan amounts. When applying for a very large home loan, finding the lowest possible mortgage rate is even more important. Below we discuss several of the best mortgages for large loan sizes.

Top Mortgages for Expensive Homes

MortgageInterest RateExpected Monthly PaymentTotal Interest CostCash Rebate
CNCBI HIBOR-Based Mortgage Plan (principal ≥ HK$10 million)2.4%*HK$44,360HK$3,307,9181.3%
BOCOM HIBOR Mortgage Plan2.45%HK$13,384HK$1,014,9261.3%
BEA HIBOR Mortgage Plan2.5%HK$13,459HK$1,037,5511.2%
Citibank HIBOR Mortgage2.5%HK$13,459HK$1,037,5511.50%*
Hang Seng Bank HIBOR Mortgage Plan2.5%HK$13,459HK$1,037,5511%
Figures based on a HK$3 million loan with a tenure of 25 years (sorted by total interest cost). CNCBI's interest rate and Citibank's cash rebate apply for loans of HK$10 million or more

Several lenders in Hong Kong offer preferred rates to consumers looking to take out large mortgages. For example, In fact, CNCBI HIBOR-Based Mortgage Plan offers a market-leading 2.40% interest rate for loans of HK$10 million or more. Other loans like Citibank HIBOR Mortgage offer top cash rebates for loans greater than HK$10 million. With this in mind, prospective borrowers should consider shopping around to find loans offering the most preferential rates and rewards.

How to Choose the Best Mortgage

HIBOR v. Prime Rate (P-Rate)

While we've represented mortgage interest rates in real terms to make them easier to compare, most lenders in Hong Kong typically charge interest rates based on the HIBOR (Hong Kong Interbank Offered Rate) or the lending bank's prime rate. HIBOR-based mortgages combine the HIBOR (the interest rate at which banks in Hong Kong lend to one another) with another loan-specific interest rate. These floating interest rates alter as the HIBOR rate changes, so what may be an attractive interest rate today could become more expensive depending on a positive change in HIBOR.

On the other hand, prime rate mortgages (widely referred to as "P-Rate" loans) are actually fixed to a rate set by the bank. These loans' interest rates are determined based on the lending bank's prime rate (the rate at which they lend to their most creditworthy customers) less some given percentage amount. Unlike HIBOR, this rate is fixed, which makes for a more stable interest rate.

Ultimately, floating-rate HIBOR-based mortgages are likely to be less expensive during periods of flat or falling HIBOR. Banks are willing to offer you a lower rate when the interbank rate is low since they know they'll have the opportunity to charge you a higher rate later. If you're comfortable with changing interest rates, and want to take advantage of low interest rates like the ones we've been experiencing lately, a HIBOR-based mortgage may be the best option. Alternatively, if you favor a more consistent, fixed rate, it may be worth paying a premium for a prime rate based mortgage.

Cash Rebates

Another factor that prospective borrowers should consider is the cash rebate offered with their preferred home loan. Simply by applying for a mortgage with certain banks, you can receive a cash rebate of a given percentage of the loans principal. In fact, you can even earn cash rebates by remortgaging with another bank to enjoy not only a more preferable interest rate, but a higher cash rebate as well. However, It is crucial to also factor in the cost of any additional fees that may arise from cancelling an existing mortgage.

Watch Out for Home Loan Fees

When applying for a loan, be sure to consider any additional costs you may incur. For example, many loans charge an application fee, often based off of a percentage of the principal amount with a certain minimum fee required. On a HK$3 million loan, this fee can range between HK$1,000–HK$15,000. Additionally, if you are approved for a loan and decide not to draw on it, you may face a cancellation fee based off of the loan principal, which on a HK$3 million loan can be as high as HK$15,000. These policies are typically designed to prevent you from applying with multiple banks at once, and can cost you money before you even get to use the loan to buy your new home. You should also be aware of any fees incurred for full or partial prepayment of your loan, which is usually calculated as a percentage of the total loan amount for paying all or some of your mortgage before it is due.

Common Mortgage Fees

Fee TypeLow EndHigh End
Application FeeHK$1,000HK$15,000
Cancellation FeeHK$5,000HK$15,000
Full/Partial Prepayment (Yr 1)NoneHK$91,000
Full/Partial Prepayment (Yr 2)NoneHK$85,000
Fee TypeLow EndHigh End
Application FeeHK$1,000HK$15,000
Cancellation FeeHK$5,000HK$15,000
Full/Partial Prepayment (Yr 1)NoneHK$91,000
Full/Partial Prepayment (Yr 2)NoneHK$85,000
Fees are based on a HK$3 million, 25-year non HOS mortgage at the average interest rate of 2.53%

What to Do if Your Application is Denied

If your home loan application is rejected, you should first analyse why you were denied. There are several reasons why your application may have been rejected and your next steps should address each specific issue.

Your LTV is Too High

An unbalanced Loan-to-Value ratio can be the result of either having too high of a loan amount or too low a property value based on what you would like to borrow against. Currently, consumers are allowed to take out a mortgage worth up to 90% of a property's value, although loans for over 60% of a property's value typically require enrollment in the Mortgage Insurance Programme. As such, you may not be allowed to borrow money if you are asking for too large a mortgage based on what the flat or home is worth.

You Fail a Stress Test

Your mortgage can also be rejected if you do not meet a certain debt service ratio. All mortgage applicants are required to pass a stress test to be determined as creditworthy. To pass the stress test, the mortgage's monthly repayment amount should be within 60% of the borrower's monthly income assuming an additional 3% interest rate on that of the loan. Those who fail this test may be able to pass so long as their monthly income, combined with that of a guarantor, is enough to pass the stress test threshold.

Mortgage-Related Frequently Asked Questions

Penalty periods are an amount of time–usually 1-3 years–where borrowers are charged a fee for full or partial prepayment of their mortgages. These fees are typically based off of a percentage of the original loan amount and may also include a refund of any cash rebate. Typically, the fees become lower the longer into the penalty period the loan is prepaid.
If you remortgage within the first 3 years of your original loan, you will likely still pay a penalty fee. However, your new cash rebate may offset this fee.
The size of a mortgage which you are allowed to take out varies based on the value of the property you plan to purchase. Depending on the mortgage you take out, the maximum is typically between 50%–90% of the property value.
Mortgage-linked accounts are a form of interest-earning deposit account linked to a mortgage held with the same bank. Interest earned from a deposit can be used towards paying off the mortgage. If you have extra cash on hand, consider placing it in a mortgage-linked account to help offset interest costs.
The Hong Kong Mortgage Corporation's Mortgage Insurance Programme (MIP) protects banks from the risk of default on mortgages with high Loan-to-Value ratios. MIP allows borrowers to take out larger loans by paying for mortgage insurance, which can be paid over the life of the loan or all at once upfront.

Methodology

We conducted our review based on information available online. We reviewed mortgages from the lenders below, examining the relevant data points of interest rates, penalty periods, fees, and cash rebates.

Bank of CommunicationsBEA
CCBChiyu Bank
Chong Hing BankCitibank
CMB Wing Lung BankCNCBI
Dah Sing BankDBS
Hang Seng BankHSBC
Nanyang Commercial BankPhillip Securities Group
Public Bank Hong KongStandard Chartered
Sun Hung Kai Credit Co.
Bank of CommunicationsBEA
CCBChiyu Bank
Chong Hing BankCitibank
CMB Wing Lung BankCNCBI
Dah Sing BankDBS
Hang Seng BankHSBC
Nanyang Commercial BankPhillip Securities Group
Public Bank Hong KongStandard Chartered
Sun Hung Kai Credit Co.
Jacob Weiss

Jacob is a Junior Research Analyst at ValueChampion, focusing on credit cards and other consumer financial products. Previously, he covered hedge funds and long only products for Cambridge Associates. He holds a B.S. in Finance from the University of Maryland and has passed Level 1 of the CFA exam.