BOCHK's 2.68% "P-then-H" Mortgage:
Hong Kong's Price War Explained

How a "P-then-H" plan works

The product name says it all: it is a two-stage mortgage. The first stage is priced off the prime rate, at "prime minus 2.32 percentage points". With BOCHK's prime rate at 5%, the effective rate is 2.68%, and borrowers can choose a two-year or three-year first stage. When that period ends, the rate automatically switches to "1-month HIBOR plus 1.3 percentage points", with a cap of "prime minus 1.75 percentage points".

The plan covers primary and secondary private residential transactions, as well as cash-out refinancing, remortgaging and further advances. Timing is the other important constraint: applications must be submitted by 31 December 2026, and the loan must be drawn between 1 November 2026 and 30 April 2027.

Rates reflect public information as at late September 2026 and are bank promotional terms. They change with market conditions and bank policy — always confirm with the bank before you commit.

The monthly numbers:
HK$5m over 30 years

A few tenths of a percentage point does not feel like much, but spread across 30 years it becomes a few hundred to well over a thousand dollars of cash flow every month. The table below uses the same HK$5 million loan over 360 months, assuming the rate stays put — this isolates the starting position of each plan:

The gap widens with the loan size. On HK$3 million, 2.68% costs HK$12,136 a month against HK$13,056 at 3.25%, a difference of HK$920. On HK$8 million, it is HK$32,363 against HK$34,817 — HK$2,453 apart.

Over a longer horizon: on a HK$5 million loan, the first three years of interest total HK$388,923 at 2.68%, HK$425,765 at 2.93% and HK$473,037 at 3.25%. Against a capped H-plan, that is HK$84,114 less interest in three years — and about HK$28,919 more principal repaid, because a lower rate leaves more of each instalment for principal. That combination of less interest and faster principal reduction is the real value of a discounted opening rate.

What if the prime rate rises 0.125 points?

This plan is priced off the margin to prime, not a locked-in number. Markets expect the US Federal Reserve may raise rates once more before year-end, and Hong Kong banks could then nudge prime up by about 0.125 percentage points. Under the scenario modelled by mReferral Mortgage Brokerage Services, prime at 5.125% lifts the P-then-H rate to 2.805% and the monthly payment to about HK$20,558, while a standard H-plan capped at prime minus 1.75 points rises to about HK$22,105 — widening the gap to roughly HK$1,547.

The reason is the margin. A standard prime-linked plan is priced at prime minus 1.75 points; the first stage here is prime minus 2.32 points, a difference of 0.57 points. Both rise together when prime moves, but the wider margin keeps this plan lower. That advantage lasts only for the first two or three years, though — after the switch to HIBOR, every plan is effectively at the same starting line.

Why banks keep cutting

Knowing why the discounts exist helps you judge how long they will last. Three numbers matter right now.

First, HIBOR is climbing while prime stays put. The US Federal Reserve raised rates by 0.25 percentage points on 16 September, but Hong Kong banks did not follow with prime, which remains at 5%. Meanwhile the one-month HIBOR rose to about 2.96% in late September, a near three-month high, and the market expects it to break 3% in the fourth quarter. Funding costs are rising while headline rates cannot, so banks compete through product structure instead.

Second, fixed-rate plans went mainstream. According to HKMA residential mortgage statistics cited by mReferral, H-plans took 61% of new loans in July, prime-linked plans 1.3% and fixed-rate plans 34.1% — an eleven-month rising streak and an eight-year high. Demand for payment certainty is real, which leaves banks without a fixed-rate product competing on rate or rebate.

Third, cash rebates are being sweetened. Market reports say BOCHK and Standard Chartered quietly raised mortgage cash rebates to 1.5% in early September, the highest among major banks, subject to a loan-size threshold of HK$10 million or more (a HK$150,000 rebate on a HK$10 million loan). Hang Seng held at 1.45%, while HSBC cut from 1.45% to 1.25%. Brokers note most banks still pay between 1% and 1.5%, with the actual figure depending on the plan, loan size and bank. With the year-end business targets still unmet, competitive offers are likely to persist for now.

Three things easy to miss

One: the offer has deadlines, so your completion date must fit. Applications close on 31 December and the loan must be drawn between 1 November 2026 and 30 April 2027. If you are buying an uncompleted unit with a completion date after next May, you may miss this round entirely. Confirm the timeline with the bank before signing a provisional agreement.

Two: it is not "2.68% for 30 years". The 2.68% applies only to the first two or three years. After that it becomes HIBOR plus 1.3 points, capped at prime minus 1.75 points. With one-month HIBOR around 2.96%, HIBOR plus 1.3 points would notionally be 4.26% — above the 3.25% cap, so the cap is what applies today. What you pay from year four depends on where HIBOR and prime stand then, and 2.68% is not the right number to project your whole-term cost.

Three: lock-in periods and clawback.Mortgages normally carry a lock-in period of two to three years, during which early repayment or refinancing triggers a penalty and may require part of the cash rebate to be returned. A cheap opening rate and a lock-in usually arrive together — "three cheap years" and "three years you cannot leave" are two sides of the same deal. Terms vary by bank and plan, so ask before you sign.

Two situations,
three checks each

If you are buying: compare monthly payments across the three plans using a mortgage calculator rather than the headline rate alone; work out the total cost, including the cash rebate (a one-off), mortgage insurance if applicable, and legal fees, against a rate difference that lasts for years; and stress-test at both 0.125 and 0.25 points higher to confirm the payment stays affordable.

If you are thinking about refinancing: check your current effective rate, including the cap on an H-plan (commonly 3.25%) and what your statements actually charge; check how long your lock-in period runs, the early-repayment penalty and whether the old rebate would be clawed back; and compare the saving against the cost. On a HK$5 million loan, moving from 3.25% to 2.68% saves HK$1,533 a month, about HK$18,396 a year, but legal and valuation fees must be deducted before you know the payback period. Refinancing also requires a fresh valuation and approval, and loan limits, property type and income requirements differ by bank, so the approved terms may differ from the advertised ones.

Frequently asked questions

Q1: Is a P-then-H plan the same as a fixed-rate mortgage? No. A fixed plan locks one rate, such as 2.93% for three years. A P-then-H plan is priced off a margin to prime (prime minus 2.32 points): if prime rises, so does your rate. The difference is that the margin is 0.57 points wider than a standard prime-linked plan.

Q2: Will I pay 2.68% for the full 30 years? No. It applies only to the first two or three years, after which the rate becomes HIBOR plus 1.3 points, capped at prime minus 1.75 points.

Q3: Should I choose the 2.93% fixed plan or the 2.68% P-then-H plan? If you want certainty and a payment that cannot move, the fixed plan offers more of it. If you think rates will not rise much over the next two or three years, or you want to ride HIBOR down after the first stage, the P-then-H plan starts cheaper. Both end up priced the same way afterwards (HIBOR plus 1.3 points, capped at prime minus 1.75 points), so the real decision is what you want to pay in the first two or three years and how much rate risk you can absorb.

Q4: Will I definitely get 2.68%? Not necessarily. Banks assess the property valuation, loan size, existing relationship and credit profile, so the approved rate, rebate and conditions can differ from the advertisement — and the offer carries application and draw-down deadlines.

The bottom line

Banks are willing to lend at 2.68% not out of generosity but because four pressures landed at once: HIBOR is high, prime cannot move, fixed-rate plans are taking market share, and year-end targets are unmet. For borrowers that is good news — but the offers have deadlines and lock-in periods, and none of it changes the fact that rates follow the market.

The practical move is to go back to your own numbers: your current effective rate, your lock-in period, the cost of switching, and then the new monthly payment. Replacing "which rate is lowest" with "which option gives me the lowest total cost over the next three years" usually makes the answer obvious.