Current Best Mortgage Offers

Any advice on the current best mortgage offers and the current rates?

Among the local banks, Bank of China has rather good deals. They currently have an official P-2.9% offer (P=7.8%), but a friend of mine just made a P-3.0% deal with them, which means his current interest is 4.8%/year. Some of the smaller banks also offer P-3.0, but their P is 8%.

Hi,


Sorry I,m a bit ignorant on this matter. Can anyone tell me what the difference is between the P- rate and the P rate. How does he end up paying an amount in between?


thanks

Thanks. OK I think ive got it now. So, when HSBC offer P-2.8% with prime rate at P 7.75, they are in fact offering mortgage rates at 4.95%. Rather confusing I must say. As far as I understand interest rates must reflect US rates based on the Peg and currency market requirements.

Interest rates are quite good in HK but there are now opportunities to benefit from even lower ir's by borrowing in foreign currencies. Currently CHF is 3.9% and JPY is almost at a position that would warrant its use at 2.24%. Even after hedging out adverse currency fluctuations it becomes a great money saver and allows you to benefit from 'real yield' on your property.

How do you go about getting a Japanese Yen mortgage. I was under the impression that for most people this kind of carry trade was almost impossible.....any tips?

When a currency mortgage is managed properly not only is the currency risk considerably reduced but there are also opportunities to reduce your capital borrowings through exchange rate movements. If you look at a typical mortgage over 25-30 years and the cyclical trends of currencies there will always be an opportunity at some stage (if not many) to redeem your loan at the same price as you entered into it, aswell as the possibility of switching currencies at favourable times throughout your loan term to make capital reductions.


jaswells - a number of providers here in HK will allow you to borrow in many currencies including Yen.


truthbetold - By investing some or all of the savings made from lower interest rates (money you would've been throwing to the bank anyway) you will be building a fund to pay back your mortgage at a later date. This will be a greater amount than if you were to put the money directly on your mortgage and hence acts as a perfect hedge against adverst currency fluctuations.

The Yen is almost at a position against the HKD as it is becoming strong against the HKD and this is when you want to change into any such currency.


As you can imagine there is more to it than can be posted here but this gives you the basic principles. The most important factor is that this process needs to be continually managed to reduce your risk and capitalize on favourable currency movements.


If you would like some more information p.m. me and i can give you the details of a number of providers here in HK.

Thats exactly right truthbetold, the Yen is almost (but not quite) at a position to use as it is still strengthening. Eventually it will weaken and this is obviously when you want to be in the currency so you have the option to switch out and reduce your capital.


Once again preferably at the time of drawdown the Yen would be weak and therefore your investment would more than cover the mortgage repayment. However to hedge out adverse currency movements it would be beneficial to invest perhaps an extra 20% on the fund which would more than cover most cyclical unfavourable trends - provided of course you entered into the currency at a somewhat strong position.

If your looking at the Yen on a short term basis, as you would being a currency specialist, then it is weakening. However over the long term and bearing in mind the length of your average mortgage it still has some way to go.


The thing you must remember with currency mortgages is that you are not trading it as an asset class you are looking at long term trends repeating themselves and then capitalising on these favourable movements.


Once again I am not recommending the Yen against HK property as it is quite a volatile currency and not at a position just yet that would warrant that risk. As I mentioned earlier the CHF still allows you considerable interest savings, is far more stable than the Yen and is in a strong position right now against the HKD. By far a better option.