--- title: "The Federal Reserve cuts interest rates by 0.25%! Understand the impact on the Hong Kong property market in one article. Colliers: Predicts a 3-5% increase in property prices by 2026" type: "News" locale: "en" url: "https://longbridge.com/en/news/269348860.md" description: "The Federal Reserve announced its last rate cut of 0.25% in 2025, lowering the interest rate to 3.5% to 3.75%. Jingluo Mortgage believes this will benefit the Hong Kong mortgage market, reduce home loan costs, drive demand for home purchases and upgrades, and stimulate market transactions. It is expected that Hong Kong property prices will increase by 3-5% in 2026" datetime: "2025-12-11T08:24:03.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/269348860.md) - [en](https://longbridge.com/en/news/269348860.md) - [zh-HK](https://longbridge.com/zh-HK/news/269348860.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/269348860.md) | [繁體中文](https://longbridge.com/zh-HK/news/269348860.md) # The Federal Reserve cuts interest rates by 0.25%! Understand the impact on the Hong Kong property market in one article. Colliers: Predicts a 3-5% increase in property prices by 2026 According to the Zhitong Finance APP, in the early morning of December 11, the Federal Reserve announced the last interest rate decision for 2025, reducing the rate by 0.25% as expected, bringing the rate down to between 3.5% and 3.75%. So, what impact will the Federal Reserve's rate cut have on the future Hong Kong property market? This article summarizes the views of various real estate institutions on the impact of the U.S. rate cut on the property market. **Jingluo Mortgage: The Federal Reserve's rate cut "unlocks" the Hong Kong mortgage market, triggering a return of home buying/moving demand** With the Federal Reserve announcing a rate cut today, the global interest rate environment is trending towards easing. Jingluo Mortgage pointed out that this constitutes a significant benefit for the Hong Kong banking mortgage and interbank lending market, likely reducing housing costs and boosting home buying and moving demand, thereby driving a recovery in property market transactions. Jingluo Mortgage stated that the Federal Reserve's rate cut will have a chain reaction on global funding costs. Given that Hong Kong's financial system is closely related to international capital flows, this U.S. rate cut provides Hong Kong banks with the possibility to lower the best lending rate (P-rate) and mortgage rates (including H rates and capped rates). In previous rounds of rate cuts, many banks in Hong Kong have lowered their P-rate, significantly reducing mortgage payments and effectively alleviating the repayment pressure on homeowners. Jingluo Mortgage analyzed that if banks cyclically lower mortgage rates, it presents an extremely attractive "home buying window" for those currently considering buying or moving. For buyers sensitive to mortgage costs and with limited budgets, lower rates can practically reduce monthly payment burdens and enhance the comparative advantage of "buying vs. renting." Jingluo Mortgage believes that with the decline in mortgage costs and the easing of the financing environment, coupled with the previous high rates that have calmed some buyers' wait-and-see sentiment, many rigid buyers, owner-occupiers, and movers may reconsider entering the market/moving. This return of demand, along with improved bank financing conditions, is expected to drive an increase in transaction volumes for both second-hand and new properties in the short term. For the overall market, this round of interest rate changes can be seen as an important factor in stimulating transactions and restoring market vitality. However, Jingluo Mortgage also reminds that although the macro rate cut brings positive signals, whether it can actually reflect in mortgage rates/bank P-rates still depends on each bank's capital costs, interbank lending rate (HIBOR) trends, and bank risk control strategies. If banks choose cautious pricing or if interbank lending rates remain high, mortgage costs may not significantly decrease. Even with rate easing, housing costs may still be higher than expected. Therefore, it is recommended that those planning to buy or move closely monitor the latest P-rate, H rate capped rates, and interbank lending rates (HIBOR) from banks before applying for a mortgage to determine their financial capacity. Jingluo Mortgage concludes that the Federal Reserve's rate cut injects potential benefits into the Hong Kong mortgage market and is an important opportunity to lower funding costs and release mortgage demand. For those intending to "get on board" or "move," this may currently be a "wait-and-see—bottom-fishing/market entry" window period. However, due to variables in bank pricing and interbank lending trends, it is advisable for homebuyers to maintain caution and rational judgment, and not to rely solely on "rate cuts" to decide on purchasing a property. **Colliers: Predicts Hong Kong property prices will rise by 3-5% in 2026** The Federal Reserve announced early this morning that it would lower the target range for the federal funds rate by another 25 basis points, to between 3.50% and 3.75%. This news aligns with market expectations and marks the second rate cut since the 25 basis points reduction on October 29 of this year, as well as the sixth rate cut since September 2024, totaling a reduction of 75 basis points for the year. Li Wanyin, Head of Research and Retail Advisory at Colliers, stated that the Federal Reserve has entered a rate-cutting cycle since September of last year, with an accelerated pace in the second half of this year. The Federal Reserve also announced that it will purchase $40 billion worth of short-term government bonds on the 12th of this month, determined to enhance market liquidity, which is beneficial for international capital to shift investments into diversified sectors for long-term stable asset deployment. This is believed to also facilitate capital inflow into real estate investments and stimulate trading activity. Hou Zhigang, Senior Director of Valuation and Consulting Services and Head of Financing Assessment at Colliers Hong Kong, indicated that the rate cut will help maintain an optimistic atmosphere in Hong Kong's residential property market. Since April of this year, property prices have begun to recover from years of decline and have shown a moderate upward trend. By October of this year, the property price index reached a 15-month high, rising 3.3% from the low in March. Although there is limited room for further reductions in Hong Kong's best lending rate, the demand driven by skilled immigration policies and international students is solidifying a stable price foundation for Hong Kong's residential property and rental markets. The rate cut further releases purchasing power, predicting a price increase of 3-5% by 2026. Liang Zhenfeng, Senior Director of Valuation and Consulting Services at Colliers Hong Kong, added that the rate cut helps alleviate financing and inventory pressures for developers. Starting from the second half of 2025, several new developments are expected to perform well in sales, reflecting robust market demand. As the investment atmosphere in the residential market becomes more active and inventory and funding pressures ease, it is anticipated that sales of primary properties will remain optimistic next year, with developers having room to gradually raise prices, leading to synchronized growth in transaction volume and prices. **Centaline Property: The Federal Reserve's rate cut stabilizes Hong Kong's property market, boosting buyer confidence as a driving force for transactions** After the Federal Reserve's meeting today, it announced a rate cut of 0.25%. Centaline Property stated that this rate cut brings further downward space for global funding costs and injects positive momentum into Hong Kong's property market, helping to accelerate the warming of market sentiment and driving transaction volumes from the end of this year to early next year. Centaline Property pointed out that the Federal Reserve's official start of a new round of rate cuts signifies the complete end of the U.S. rate hike cycle, which helps alleviate the pressure of rising mortgage rates and funding costs in Hong Kong. Hong Kong's mortgage rates and interbank rates are often influenced by the U.S. interest rate structure. Under the expectation of rate cuts, H mortgage rates and capped rates are expected to remain in a lower range, reducing the burden of mortgage payments and stimulating the release of both self-use and investment demand. The Centaline City Leading Index (CCL) has significantly rebounded in recent months, reflecting that the expectations of rate cuts and improvements in the local economy are translating into actual buying activity. Centaline indicated that the rate cut helps reinforce the trend of "buying being cheaper than renting," prompting many previously hesitant buyers to re-enter the market, especially small to medium-sized units and first-time buyers, who benefit the most from the improvement in mortgage payments due to lower rates. Centaline Property expects that as the interest rate environment becomes clearer and market expectations for economic prospects improve, the property market is gradually emerging from the adjustment period. Both primary and secondary transaction volumes are expected to continue to increase, with property prices conditionally maintaining a moderate upward trend. The group believes that the market is in a "recovery from the bottom" phase, representing an important window for buyers to enter the market Zhongyuan emphasized that if the global capital environment remains loose and local policies remain stable, the Hong Kong real estate market is expected to maintain a steady upward trend in the coming year. The company will continue to monitor changes in HIBOR, bank interest rate adjustments, and buyer sentiment to provide clients with the latest market analysis and property strategies. **Midland Realty: The Federal Reserve's rate cut continues to inject vitality into the Hong Kong property market, with first-hand transactions expected to reach a semi-annual high in the second half of the year** With the Federal Reserve announcing today a reduction of the U.S. benchmark interest rate to 3.75%, Midland Realty believes that this move will further promote global capital flow and reduce financing costs, benefiting the Hong Kong property market and luxury housing sector. The company expects that under the influence of multiple factors, the transaction volume of first-hand properties in Hong Kong (especially luxury projects over HKD 100 million) in the second half of 2025 is likely to reach a semi-annual high. Midland Realty pointed out that this rate cut by the Federal Reserve not only lowers the cost of U.S. dollar funds but also creates expectations of a looser mortgage loan environment in Hong Kong through the linked exchange rate system and international capital flow. Lower financing costs will alleviate mortgage pressure on buyers and enhance confidence in property purchases or investments; at the same time, it will have a positive effect on luxury buyers' financial arrangements, loan costs, and asset allocation. On the other hand, Midland Realty believes that the current local capital market and wealth effect in Hong Kong are also showing signs of improvement, with rising Hong Kong stocks and wealth accumulation providing better conditions for some high-net-worth individuals in terms of assets and cash liquidity, thus supporting the luxury housing market. Based on the above environment, Midland expects: Transactions of first-hand luxury properties over HKD 100 million in the second half of the year may set a semi-annual high; The overall supply and demand in the property market and transaction atmosphere will further become active, not limited to luxury properties but also including high-end and mid-to-high-end residential properties; For buyers preparing to enter the market, this may be a relatively favorable "window period," as lower financing costs and improved asset liquidity can make property purchases or investment conditions more attractive. The company emphasizes that it will continue to monitor global interest rate trends, changes in local mortgage rates, bank financing and loan costs, as well as capital market and wealth distribution conditions, to provide clients with the latest market analysis and property recommendations. **Hong Kong Property: The Federal Reserve's rate cut injects confidence into the Hong Kong property market, likely to drive a recovery in transactions** With the Federal Reserve announcing a 0.25% rate cut today to stimulate the U.S. economy and address global deflation risks, Hong Kong Property believes that this move has positive implications for the overall interest rate environment and market sentiment in Hong Kong, likely promoting a decrease in mortgage costs and releasing housing demand, thereby driving a recovery in property transactions. Hong Kong Property pointed out that due to Hong Kong's peg to the U.S. dollar, along with the fact that Hong Kong's banking and financial system typically adjusts in line with U.S. interest rate trends, the U.S. rate cut will exert downward pressure on mortgage and loan rates in Hong Kong. Past rate cuts by Hong Kong banks have proven to alleviate housing payment pressure, thus increasing market expectations for lower mortgage loan costs, which helps ease the burden on buyers. For those interested in purchasing property, the rate cut lowers the financing threshold and enhances the attractiveness of the cost of buying versus renting, which may prompt some previously hesitant buyers to reconsider entering the market or upgrading their homes. Hong Kong Property believes that the rate cut not only improves the mortgage environment but also helps boost market confidence. If local demand and supply remain stable or improve, and the policy environment does not change, property transactions are expected to rebound in the coming months In the past, after a rate cut cycle, signs of recovery in transaction volume have appeared in the Hong Kong property market. This is especially true for buyers with rigid demand, small to medium-sized units, and those looking to purchase or upgrade their homes through mortgages. The current environment may be a relatively ideal entry window for potential buyers. Hong Kong Property suggests that interested buyers should closely monitor changes in mortgage rates and bank policies to seize the right opportunity. However, Hong Kong Property also reminds that interest rates are just one key factor affecting the property market. The future trend of the property market is still influenced by multiple variables such as supply, policy, economic fundamentals, and market sentiment. Even if financing costs decrease, it does not necessarily mean that property prices will significantly rise. For medium to long-term investors and homebuyers, careful assessment is still necessary. Hong Kong Property emphasizes that homebuyers and investors should focus on medium to long-term returns and base their decisions on mortgage rates, bank repayment capabilities, rental trends, supply and demand conditions, and changes in the overall economic environment. Hong Kong Property holds a cautiously optimistic attitude towards the Federal Reserve's recent rate cut, believing that the rate cut brings substantial improvement to the mortgage and property environment in Hong Kong, alleviating pressure on home financing and potentially stimulating a wave of returning buyers, thus driving a recovery in property market transactions. For buyers with rigid demand, self-occupiers, or medium to long-term holders, the current situation can be seen as a relatively favorable "entry window." At the same time, it emphasizes the need to approach the future trend of the property market with caution and to avoid being overly optimistic about property prices due to falling interest rates ## Related News & Research - [A Look At Iveco Group (BIT:IVG) Valuation After Strong Multi Year Shareholder Returns](https://longbridge.com/en/news/281718563.md) - [Sugar Prices Fall on Weakness in Crude Oil](https://longbridge.com/en/news/281402179.md) - [Assessing Ayalon Insurance (TASE:AYAL) Valuation After Strong 2025 Earnings And Sharply Higher Shareholder Returns](https://longbridge.com/en/news/281707510.md) - [Fenix Outdoor Calls 2026 AGM, Proposes Lower Dividend and Governance Continuity](https://longbridge.com/en/news/281481689.md) - [Home prices rose more than expected to start 2026](https://longbridge.com/en/news/281197088.md)