Property
H-Plan vs P-Plan 2026:
How to Choose When Rates Are Tied?
Gary Chung（FinKit Editor-in-Chief） · Published：August 5, 2026
When getting a mortgage, banks typically ask: "H-Plan or P-Plan?" Historically the answer was clear — H-Plan when rates are low, P-Plan when rates are rising. But 2026 is nuanced: the H-Plan cap rate and P-Plan rate are tied at 3.25%. When rates are identical, how do you choose? This article reveals the structural differences behind both plans.
What Are H-Plan and P-Plan, Actually?
H-Plan: Linked to HIBOR (With Cap Protection)
H-Plan rate = 1-month HIBOR + fixed spread. As of July 2026, all five major banks use H + 1.30%. With 1-month HIBOR at 2.60%–2.96%, the formula rate would be 3.90%–4.26%. But here's the key: H-Plan has a cap rate = P − 1.75%. For HSBC/Hang Seng/BOCHK (P=5.00%), the cap = 3.25%. Since the formula rate exceeds the cap, all H-Plans currently operate at the cap rate of 3.25%.
🔑 Key Insight
H-Plan's cap rate = P-Plan rate (both are P minus the same deduction). This means: H-Plan's worst case = P-Plan (tie); when HIBOR is low, H-Plan can be cheaper (win). H-Plan is essentially a free rate-down option — you can win, but you can never lose.
P-Plan: Linked to Prime Rate
P-Plan rate = bank's P value − fixed deduction. Most banks use P − 1.75% (BEA uses P − 2.00%). P-Plan's strength is stability — P values don't change daily, typically adjusting only every few months or even years.
July 2026 Rate Comparison: Nominal vs Actual
| Bank | P | H-Plan Formula | H-Plan Actual (Cap) | P-Plan Rate | Gap | Rebate |
|---|---|---|---|---|---|---|
| HSBC | 5.00% | 4.00% | 3.25% | 3.25% | Tied | 0% |
| Hang Seng | 5.00% | 3.90% | 3.25% | 3.25% | Tied | 0% |
| BOCHK | 5.00% | 4.26% | 3.25% | 3.25% | Tied | 0% |
| DBS | 5.25% | 4.26% | 3.50% | 3.50% | Tied | 1.30% |
| BEA | 5.25% | 4.26% | 3.50% | 3.25% | P-Plan −0.25% | 0% |
For HSBC/Hang Seng/BOCHK, H-Plan and P-Plan are completely tied at 3.25%. DBS is tied at 3.50% but offers 1.30% cash rebate. BEA's P-Plan (3.25%) beats its H-Plan cap (3.50%). The key isn't "which rate is lower" — it's other factors (cash rebate, holding period, rate outlook) that determine your choice.
Why Are They Tied in 2026?
This isn't coincidence — it's a normal result of different monetary policy transmission speeds. P follows policy rates quickly: Fed cuts → HKMA adjusts Base Rate → banks cut P within 1–2 months → P-Plan rate falls. HIBOR reflects actual supply and demand for funds and lags behind: funds need time to flow back into Hong Kong after the 2022–2024 rate-hiking exodus. P falls fast; HIBOR falls slow → P-Plan rate drops → H-Plan hits cap → rates tie.
H-Plan's Hidden Advantage: Free Rate-Down Option
| Rate Environment | H-Plan Actual | P-Plan | Result |
|---|---|---|---|
| HIBOR High (>1.95%) | Cap = 3.25% | 3.25% | Tie ✓ |
| HIBOR Low (<1.95%) | H+1.30% < 3.25% | 3.25% | H-Plan Wins ✓ |
H-Plan can never lose to P-Plan (within the same bank) — worst case is a tie, low-rate environments win. Trigger point: HIBOR must fall below 1.95% for H-Plan to break below the cap. Current HIBOR ~2.60–2.96%, so ~0.65–1.01pp away. At 0.25% per Fed cut, that's about 3–4 more cuts, projected ~6–12 months from now.
Real Numbers: HK$8M Loan, 30-Year Amortisation
| Choice | Rate | Monthly | Cash Rebate |
|---|---|---|---|
| HSBC/Hang Seng/BOCHK H/P | 3.25% | HK$34,817 | $0 |
| DBS P-Plan (with rebate) | 3.50% | HK$35,924 | HK$104,000 |
| BEA P-Plan | 3.25% | HK$34,817 | $0 |
DBS Cash Rebate Deep Dive: Rebate vs Higher Rate
| Holding Period | DBS Extra Interest | Rebate | Net Result | Verdict |
|---|---|---|---|---|
| 1 year | HK$13,110 | HK$104,000 | +HK$90,890 | DBS ✓ |
| 3 years | HK$39,852 | HK$104,000 | +HK$64,148 | DBS ✓ |
| 5 years | HK$66,420 | HK$104,000 | +HK$37,580 | DBS ✓ |
| 8 years | HK$106,272 | HK$104,000 | -HK$2,272 | Near Break-even |
Break-even ≈ 7.8 years. DBS rebate suits borrowers planning to refinance or sell within 5 years. Holding beyond 8 years, HSBC/Hang Seng/BOCHK's lower rate advantage exceeds the one-off rebate.
2026 Decision Framework
New mortgage, want simplest
Choose HSBC/Hang Seng/BOCHK H or P (both 3.25%). Don't overthink it.
New mortgage, expect to refinance/sell within 5yr
DBS P-Plan (3.50%) + 1.30% rebate → net positive short-term.
New mortgage, holding 10+ years
HSBC/Hang Seng/BOCHK H-Plan (3.25%). Wait for HIBOR to fall, enjoy the rate-down option.
Existing H-Plan, considering switching
If already at cap 3.25%, you're tied with P-Plan. No rush unless you want the DBS rebate. Wait for penalty period to end.
Existing P-Plan, considering H-Plan
Same rate, but H-Plan has the free rate-down option. Worth switching if you believe rates will keep falling.
Quick Decision Checklist
New or refinance?
New → HSBC/Hang Seng/BOCHK. Want rebate → DBS. Refinance → continue below.
Penalty period ended?
No → wait. Penalty HK$80k–240k can wipe out all savings. Yes → continue.
Current actual rate?
≥4% → worth refinancing to 3.25%. 3.25–3.50% → tied with market, no rush. ≤3.25% → your rate is already excellent.
Expected holding period?
≤3yr → pick cash rebate bank (DBS 1.30%). 3–8yr → calculate rebate vs rate. ≥8yr → pick lowest rate (HSBC/Hang Seng/BOCHK).
Conclusion: Tied ≠ No Difference
H-Plan and P-Plan are tied at 3.25% in July 2026, but significant structural differences lurk beneath. H-Plan's cap design gives it a free rate-down option — you can never lose to P-Plan but can win. P-Plan's stability has its own value, especially for borrowers needing fixed budgets.
The choice depends on your holding period, loan amount, income stability, and rate outlook — not simply "which rate is lower." Key takeaways: H-Plan wins when HIBOR falls below 1.95% (projected 6–18 months); DBS rebate wins for sub-5-year holds; for long holds, pick the lowest-rate bank and let the H-Plan option work for you.
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