All my mortgages are at floating rates. Some are prime linked (i.e. they are set by the lending banks) and some are linked to HIBOR (the Hong Kong Inter-Bank Offer Rate set by the market). Interest rates on the prime linked loans adjust at the discretion of the banks and were adjusted downwards shortly after the US Federal Reserve cut US interest rates. HIBOR linked loans are typically reset every three months. Some of these mortages have reset already and the balance will reset to reflect the interest rate cuts over the next two months or so.
The good news is that the latest round of interest rate fixings have been at rates between 2.95% and 3.26% - all below the rate of inflation and tax deductable (although with tax rates at either 16% or 17% this is not as big an issue in HK as in higher tax jurisdictions).
This makes it very hard to justify making early repayments - so what should I do with the extra cash flow?
No comments:
Post a Comment