Interest rate movement.

Hello again,


I've recently gone to an HSBC mortgage consultant to ask for options.

What he gave me was this:

4mill property price - 85% ltv + insurance was a loan of 3.481mill
Monthly repayment at 12.6k

the interest rate would be based off of 2 variables, H and P (dont have the numbers in front of me right now, so will post tomorrow. ) and my interest rate would automatically go to whichever one is lower.
now If i remember correctly, H has something to do with the lending rate between banks, and P has something to do with the global market?

He also said there is no "cap" on the interest rate, so it could very well be that within a 1-2 year period, the interest rates could skyrocket.

What I'd like to know is 1) if that's true that no cap on the interest rate is possible for a 85% mortgage plan and 2) How fast could either H or P increase. Are we talking months or years?

NOW is not the time to be making highly-geared property investments.

You know the reason, since it is clear in your post.
Whatever someone here may say, it will not remove the risk you identified.
And the market is not cheap.

I had suggested HK$2-4 Million properties earlier this year,
but even then - it was mainly as a Rent hedge* - and I did not think high gearing was smart.
(My partner bought a property with a 40% loan in 2013 - that made sense then, the Gross yield
was around 4.5%, and rising rents are pushing that higher.)

*BTW, concerning Rents:
Today's SCMP, Property Section shows another Jump in average Rents,
to more than HK$25 psf. That's up from maybe $23.60 earlier this year.
This drive must be unsettling for renters