HSBC and The Co-operative Bank, formerly PSIS, are the latest banks to cut advertised fixed-term mortgage interest rates and term deposit rates on the back of recent falls in swap, or wholesale, rates the banks' themselves borrow at. Despite an array of cuts to fixed-term mortgage rates over the past couple of weeks, no bank has yet cut its floating, or variable, mortgage rate.
In terms of mortgage rates, HSBC has cut its two, three, four and five-year mortgage rates for premier customers by between 25 and 33 basis points to 5.50%, 5.74%, 6.20%, and 6.65%, respectively.
The Co-operative Bank has cut its two, three and four year mortgage rates by between 15 and 20 basis points to 5.55%, 5.75%, and 6.10%, respectively.
HSBC's premier customers must have either a minimum of NZ$500,000 in home loans with HSBC, or at least NZ$100,000 of savings and investments with HSBC.
With term deposits, HSBC has cut all its rates from nine months to five years by between five and 25 basis points. Its nine-month rate for a minimum deposit of NZ$10,000 is now 3.90% and for a five-year deposit is 5.15%. For a NZ$100,000 deposit it's now offering 4% for nine months and 5.25% for five-years.
The Co-operative Bank cut its term deposit rates for a minimum NZ$10,000 deposit for its 18 month to four-year terms by between five and 20 basis points. It now offers 4.55% for 18 months, 4.60% for two-years, 4.80% for three-years, and 5.10% for four years. See all bank advertised term deposit rates and how HSBC and the Co-operative Bank's new rates compare to those offered by other banks here.
The HSBC and Co-operative Bank mortgage and term deposit rate cuts are the latest in a series of cuts to both by banks. They come with wholesale, or swap, interest rates falling in recent weeks on worries about global and local economic growth prospects. Speculation has also been mounting that the next move in the Official Cash Rate - currently at a record low of 2.5% - may be down, highlighting a lower for longer interest rate environment.
'Window of opportunity for borrowers'
Bank lobby group, the New Zealand Banker's Association (NZBA), says cuts in fixed interest rates highlight the level of "intense competition" in the New Zealand banking sector.
"This is good news for borrowers, but will impact on returns for bank depositors," NZBA chief executive Kirk Hope said. "Interest rates are at historically low levels. This is due to a drop in wholesale interest rates as a result of ongoing uncertainty in the global economy, driven largely by volatility in Europe. Consumers are getting the benefit of this window of opportunity.”
“On the flip side it’s important to remember that cuts in lending rates also mean a decrease in savings interest rates. This will affect depositors who rely on the interest returns their investments earn. At a national level, this could impact on our private savings which have increased through the economic recovery," Hope added.
(Update adds comments from the NZBA).