How Hong Kong banking employees are mortgaging their life away

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It is nothing new for banks in Hong Kong to offer staff mortgages at a below the market interest rate to assist employees to buy property. With the raging property prices, this benefit has never been more significant to banking employees.

A friend of mine recently moved to a major global bank, well-known for offering generous loans to help employees become property owners. I am very happy for him. He has landed a stable job with incredible housing benefits.

But instead of being filled with excitement to buy a flat, he finds himself in a dilemma – using the staff mortgage implies he has to commit his career to the bank for life.

I guess my friend is only thinking twice about committing life-long to the bank because he already owns a property. The staff loan is going to help him upgrade to a bigger flat, but he is not as desperate to purchase a flat.

This is uncommon among most snails without shells in Hong Kong, who would do anything to become a property owner.

This benefit is so attractive, I think it will be difficult for employees in banks to even consider moving to another job. So I reached out to a couple of recruiters to find out how staff mortgages are impacting job movements in banks.

Sid Sibal, financial services practice associate director at Hudson Hong Kong, said he was seeing less movement among banking employees in operation roles because the staff mortgages were a great benefit they did not want to lose.

However, this benefit does not have much impact on people in sales roles. For high earners who are getting more than a million per annum, they are less likely to stay in a role because of staff mortgages.

But let’s be realistic, how many million dollar men and women are there in a bank?

The latest figures from the Census and Statistics Department revealed the monthly median income for professionals in Hong Kong is only HK$41,300. This means a majority of banking employees may be prepared to stay for life in their organisations if they want to make use of the staff housing mortgages.

Reina Cheng, managing director at Morgan McKinley, also agrees more and more bank employees are staying for life with a bank because of staff housing mortgages.

She also pointed out HSBC has done a great job in attracting and retaining talent by offering housing loans equivalent to 120 times of the employees’ monthly salary.

“For recruiters, it certainly makes it easier to persuade candidates to join HSBC because of this benefit,” she said.

Alan Wong, managing director and country head of Kelly Services Hong Kong said he has not seen a big impact on the recruitment landscape of the industry.  However he thinks the perk will be attractive for employees who are considering to join the banking sector.  "Banks may find this perk helpful to attract digital marketers, data analysts, salespersons or other hot pursuits from 4As agencies, insurance companies or other commercial sectors," he said.

"To my knowledge, many young couples of upper middle-class or above tend to obtain the deposit of their first property from their own families. The mortgage benefit at present is still not attractive enough, taking into consideration the potential hassles of repaying or refinancing the loan when they switch jobs. However, for those who are determined to be more independent from their families, are struggling with their first deposit and desire a stable work environment, this can be an attractive offer," Wong said.

Anna Agafonova, manager at Oliver James Associates does not see the staff mortgages as a deciding factor for employees to stay.

"For me, discounted mortgages have had little to no impact on the negotiation process or wider recruitment landscape. Hong Kong is a fast-paced job market, where career moves happen every two years or so, regardless of financial commitments. Historically, very few candidates opt-in to the mortgage programme because they view it as a commercially weak decision," she said.

Group managing director, Nick Lambe at Links International said he has not had any instances of people at HSBC using this as a factor to stay with the organisation.  He believes the staff mortgages is an attractive perk but people are also going to look at salary and development opportunities when making decisions on their careers.