Hong Kong’s interest rates are likely to stay low for an extended period, supported by abundant liquidity, an environment that could benefit both the property and capital markets and may assist the government in moving its operating account back into surplus, according to Financial Secretary Paul Chan Mo-po.
Speaking on a radio program, Chan noted that while low interest rates are favourable for mortgage holders and businesses, the property market may not experience a strong rebound as seen in previous cycles, due to evolving supply-demand conditions and other contributing factors.
He described the housing market as “stable” based on his preliminary evaluation.
The Hong Kong Dollar has seen gains in recent days, prompting the city’s de facto central bank to intervene multiple times by purchasing US Dollars. This activity has driven the one-month Hong Kong Interbank Offered Rate (HIBOR) to its lowest point in more than two and a half years, The Standard reports.
Hong Kong is currently forecasting a HK$67 billion budget deficit for the 2025–26 fiscal year. Chan stated that the capital account is expected to remain in deficit as the government ramps up investment in the Northern Metropolis development, with annual infrastructure spending projected to increase from an average of HK$90 billion to HK$120 billion.
Negative equity cases in Hong Kong have exceeded 40,000, but Chan downplayed the risks, pointing to a low mortgage delinquency rate of just 0.11%, along with stable employment and rising median incomes as signs of resilience.
Chan also stated that the government is unlikely to make major adjustments to its full-year growth forecast in the near term, citing persistent global economic uncertainties. This comes after the economy expanded by 3.1% year-on-year in Q1.
In addition, the Financial Secretary remains upbeat about Hong Kong’s financial markets this year, noting that a significant number of mainland Chinese companies are preparing to list in the city, which could boost market activity.
Regarding exports, Chan said the strong performance in the first quarter was largely driven by overseas buyers front-loading orders in anticipation of potential tariff changes. However, he cautioned that this momentum may not be sustained in the coming quarters.
Moreover, to reduce risks stemming from ongoing trade tensions, Chan underscored the need for Hong Kong to diversify its export markets, deepen integration with the mainland economy, and support local businesses in upgrading and transforming their operations.