Hong Kong property stocks suffered their biggest selloff in seven months, hit by disappointing earnings at the city’s top builder and a major bank’s reported plan to raise mortgage rates.

The Hang Seng Index’s property sub-gauge dropped as much as 4.5%, the most since Feb. 13. Sun Hung Kai Properties Ltd., Hong Kong’s biggest developer, led the declines by plunging nearly 13% to its lowest intraday level since 2009.

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The selling came after Sun Hung Kai recorded a worse-than-expected 17% drop in full-year profit, another example of a local real estate market pressured by rising interest rates and a supply glut. HSBC Holdings Plc’s reported plan to increase mortgage rates also has exacerbated concerns about a potential price war among local developers.

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If more banks follow HSBC’s lead, it will add further pressure on local developers “as they either need to cut prices to support sales, which will hurt margins, or simply suffer from lower revenue,” said Patrick Wong, a Bloomberg Intelligence analyst.

Fears of a home price war in the city has surfaced since billionaire Li Ka-shing’s real estate arm offered deep discounts on a new project last month. Other local builders also fell Monday, with New World Development Co. down as much as 8.3% and Henderson Land Development Co. off 5.7%.