HONG KONG • Hong Kong’s home loan rates are seeing their biggest jump in five years as higher global funding costs boost speculation local lenders will have to finally follow the US Federal Reserve (Fed).

HSBC Holdings plc, BOC Hong Kong Holdings Ltd and Standard Chartered plc will lift the cap for mortgages linked to the city’s interbank rates to effectively 2.35% starting next Monday, while prime rate-based mortgages will rise to 2.25%, according to emailed statements late on Wednesday.

Mortgages linked to the prime rate, also known as best lending rate, are currently priced at 2.15%, according to data from Centaline Mortgage Broker Ltd, leading to an increase of 10 basis points. The last time they’d seen an increase of this magnitude was in March 2013, the data show.

The mortgage industry has been a battlefield since 2016 as apartment prices rose to records and lenders kept interest rates low to lure customers in the world’s least affordable housing market. However, borrowers are now starting to price in higher rates on speculation Hong Kong’s major lenders will begin to follow the Fed in tightening.

The one-month Hong Kong dollar Hibor has climbed 14 basis points this year to 1.33% yesterday. In June, it reached 2.125%, the highest since October 2008.

The Hong Kong Monetary Authority has urged banks to raise mortgage rates, Sing Tao Daily reported on Wednesday, without saying where it got the information. — Bloomberg