Hong Kong’s December mortgages shrink 21.1% as high rates drive homebuyers to sidelines

Hong Kong’s mortgage applications fell by more than a fifth in December, according to the city’s de facto central bank, in a sign of cautiousness among homebuyers amid geopolitical uncertainties and higher interest rates.

Mortgages shrank by 21.1 per cent last month to 6,306 from November, the first monthly drop since September, which saw 15.9 per cent lower demand, according to a statement by the Hong Kong Monetary Authority (HKMA).

Hong Kong’s benchmark interest rate, which has moved in lockstep with US monetary policy since 1983, is likely to remain higher for longer, as the return of US President Donald Trump to the White House is expected to usher in a spate of tariffs and protectionist policies that may fuel inflation.

“Interest rates remain the most important factor in affecting the property market this year,” said Knight Frank’s Greater China senior director and head of research Martin Wong.

Hong Kong’s mortgages and borrowing rates hovered at a 23-year high after 11 increases between March 2022 and July 2023, until a downward cycle began in September 2024, followed by cuts in October and December.

To maintain their operations, banks accelerated their mortgage approvals, clearing 5,342 applications valued at HK$25.53 billion (US$3.28 billion) last month, 2.6 per cent higher than a year ago, and an increase of 5.4 per cent compared with November.