Hong Kong's banking watchdog has acted to head off a mortgage price war by setting guidance floors on mortgage rates, and warning lenders of default risks in a property market correction.
The move came after banking giant HSBC last month launched the city's lowest mortgage rate - a 0.65 percentage point premium to the one-month Hong Kong interbank offered rate (Hibor).
HSBC's offer, the lowest in 20 years, was soon matched by its rivals.
The Hong Kong Monetary Authority fears that the intense price competition in mortgages is not sustainable and puts smaller banks at risk in the event property prices slide and global interest rates rise.
South China Morning Post