Tue, Nov 02, 2004 - Page 11 News List

Bucking trend, HSBC extends `Almighty' loan

DIVINELY LOW After the central bank raised its key interest rates, most banks are due to follow suit. But HSBC says that it will stand by its low-rate mortgages

By Joyce Huang  /  STAFF REPORTER

Most banks in Taiwan are prepared to raise interest rates following the central bank's increase of its key interest rate (the rediscount rate) by 25 basis points to 1.625 percent in late September. But Hong Kong and Shanghai Banking Corp (HSBC) is bucking the trend, at least with its home mortgages.

HSBC, the second largest foreign bank in Taiwan, yesterday announced that it would not only extend its low-interest home mortgages, but also waive application fees for another 500 new applicants.

In its revised "Almighty Mortgage" package, which was launched in August with an interest rate as low as 1.99 percent for the first year, the bank said it would allow new applicants to waive mortgage servicing costs before Dec. 14, a company executive said at a press gathering.

According to HSBC, the mortgage services including application, property appraisal and termination fees could cost NT$10,000 per mortgage application.

"Almighty received a very positive market response and stimulated the bank's home-loan sales in the third quarter to see a 207 percent growth compared to the same period last year," said Jacky Shen (沈家齊), vice president of marketing at HSBC.

The British-based bank's mortgage package has the second lowest interest rate in the marketplace, behind only rival Bank of Taiwan's (台灣銀行) 1.98 percent and below the government preferential home loans' 2.3 percent.

According to Shen, the bank's mortgage package features interest rates as low as 1.99 percent for the first year and 3.3 percent for the following years, but requested borrowers to make a monthly deposit of NT$10,000 in their HSBC saving accounts, which earn interests on a daily basis.

Almighty borrowers will be free to make withdrawals anytime from their saving accounts, but interest earnings from the accounts' balances will be deductible to their home-mortgage interest payments.

"By doing so, our clients will be managing their assets in the same HSBC account, which endows us with cross-selling opportunities in the future," Shen said.

The bank's package, moreover, allows borrowers to accelerate their installment payments on a bi-weekly basis, which also helps save interests.

Shen yesterday further expressed confidence in the bank's loan growth, vowing to overtake Citibank Taiwan and soon take up the number one spot in the local home-and-credit-loan market. The bank currently grants over NT$40 billion to home-loan recipients and another NT$10 billion to credit-loan recipients, he added.

Following its previous NT$1.2 trillion loans, which benefited a total of 620,000 households, the government's recent preferential home loans worth NT$300 billion for first-time home buyers is expected to run out in upcoming March and benefit another 160,000 households.

In related news, Chunghwa Post Co (中華郵政) yesterday raised its interest rates for saving accounts by between 0.025 percent and 0.55 percent. Using those hikes as guidelines, local banks will follow suit with higher rates on the government's preferential home mortgage.

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