According to Zhitong Finance APP, after the Federal Reserve's meeting, the interest rate was cut by 0.25% as the market expected, marking the third reduction this year. HSBC and BOC HONG KONG have successively announced a decrease in the prime rate by 0.125% to 5.25%, and it is expected that other banks will follow suit.

Wang Meifeng, Managing Director of Centaline Mortgage, pointed out that despite the recent increase in bank interbank offer rates, with the 1-month Hong Kong dollar interbank rate hovering around 4%, banks have decided to continue lowering the prime rate (Hong Kong Prime Rate). After the reduction, the annual interest rate for mortgages has cumulatively decreased by 0.625%, with market mortgage rates gradually dropping from 4.125% in September to 3.5%. For an average mortgage amount of 4.5 million Hong Kong dollars, monthly repayments have cumulatively decreased by 1,600 Hong Kong dollars (a reduction of 7.3%), further alleviating the repayment burden for both home buyers and current mortgage holders.

She also stated that based on the last interest rate hike cycle where the increase in Hong Kong Prime Rate was less than that in US interest rates, with US rates rising over 5% while Hong Kong's only increased by 0.875%, the Hong Kong Prime Rate will not be adjusted downward after every US rate cut. The magnitude of the Hong Kong Prime Rate cut this time will be significantly less than that of US interest rates. Wang Meifeng expects that after banks accelerate the decrease of the prime rate by 0.625% this year, it is anticipated that there will still be a reduction of 0.25% next year, with the USA continuing to reduce rates and the Hong Kong Prime Rate further decreasing by 0.25%, completing the reduction cycle, at which point the Hong Kong mortgage rate will be reduced to 3.25%.

Wang Meifeng pointed out that after the Hong Kong Prime Rate completes the rate cut cycle, whether the Hong Kong mortgage rate will fall further depends on the magnitude of the interbank rate decline. According to the current capped interest rate level of H mortgage, the 1-month interbank rate needs to drop below 2.2% for the mortgage interest rate to fall below the capped rate. Currently, the interbank rate is still significantly higher at nearly 4.5% than 2.2%. However, if the interbank rate can gradually decline next year, the reduction in banks' funding costs may drive banks to lower their mortgage plan interest rates, leading to a further decrease in market mortgage rates. During the last interest rate hike cycle, the actual mortgage interest rate increased by a total of 2.625%, which was not only due to banks increasing the prime rate but also because of rising interbank rates and banks adjusting their mortgage plan interest rates. Therefore, next year's changes in overall mortgage rates will be adjusted based on the prime rate cuts, interbank rate declines, and changes in banks' mortgage plan interest rates.

In terms of the housing market, Wang Meifeng indicated that the market has warmed up since September following the interest rate cuts, further stimulated by various bullish factors including the lifting of restrictions on mortgage loans in October. Although in November, the market became more cautious due to news of Donald Trump's election and fluctuations in the financial markets, the continued extension of the rate cut period next year, the stabilization of local economic recovery, the complete relaxation of mortgage regulations, and the activation of local economic activities through multiple actions are expected to boost the market. The mainland will continue to launch measures to stimulate the economy, and it is believed that the housing market will gradually recover further and improve next year.

She also mentioned that although the pace of US interest rate cuts will slow down next year, Hong Kong banks have already accelerated the reduction of the prime rate by 0.625% this year. This has relieved the repayment burden for home buyers and mortgage holders ahead of time, coupled with the average rental return rates rising to 3.5% this year, with some exceeding 4%. Compared to the market mortgage rate of 3.5%, there are more cases where rental expenses are lower than mortgage repayments. Many housing demand individuals tend to shift from renting to buying, and it is expected that the rate cut period will continue until 2027, aiding in the sustainable support of bullish factors for the housing market.

Regarding US interest rates, Wang Meifeng pointed out that according to the US interest rate statement, after a cumulative decrease of 1% in US interest rates this year, the pace of rate cuts will slow down next year, but the rate cut cycle will extend until 2027. As the market consensus believes that the economic policies of the new US president may hinder the speed of inflation decline, the rate cut pace in the USA may either slow down. However, after the last aggressive rate hike period, US interest rates are currently at an early stage of the reduction cycle and remain at a high level. If the high rates persist, it will impact the current economy. It is expected that the US rate cut period will still continue, and high US rates will likely require further adjustments downward in rates, but the pace of rate cuts will be influenced by inflation trends, employment, and economic data changes. It is expected that the further decrease in US rates next year could reach between 0.5% to 0.75%, with US interest rates likely falling below 4% next year.