One bank in New Zealand offers the ability to purchase a New Zealand property and have the mortgage denominated in the currency in which you earn income.
That is, provided your income is in one of six international currencies, the AUD, USD, HKD, SGD, JPY or the EUR.
HSBC's 'foreign currency home loans' avoids the uncertainty of currency conversions by matching the currency of your loan with the currency of your overseas income.
A New Zealand dollar borrowing limit applies even though the loan is in another currency. This means there is an exchange rate risk associated with this type of loan, and you could owe more in New Zealand dollars than the NZD equivalent that you originally borrowed, should the currency move adversely.
You must, therefore, be able to demonstrate an ability to reduce borrowings where this occurs.
And there are some specific criteria that you must meet to qualify for a Foreign Currency Home Loan.
Firstly, the borrower cannot be an individual - it must be a trust or company.
Secondly, loans are for residential properties only.
And thirdly, your primary source of income must be in the currency in which the loan is provided.
Once you meet these criteria, you then face some limits that may be a bit stricter than 'normal' domestic NZ$ home loans.
- the maximum LVR is 60% for stand alone dwellings in main centres
- the maximum term is only 20 years.
In addition HSBC won't lend if the real purpose is currency speculation. Nor will they allow 'interest-only' loans under this facility; repayments must be principal+interest.
Another limitation is that no redraw facility is available.
Currently, this three month fixed rate is not stated on their website but "is available on request".
We asked the bank for some clarity on how the interest rate is based but they have not supplied that information so far. Is it a NZD mortgage rate, or one based on the currency of the drawdown? When we get it, we will update this story with those details.
HSBC say these types of loans suit certain types of clients and they are usually high net worth customers, usually offshore professionals.
6 Comments
Global players have designated us a "Food Commodity, High Interest Rate" country. We must fulfil our place in the global scheme of things.
Others (UK, US, Germany most 1st world countries) are allowed to have low interest rates. We must kill off all small farms, small businesses, home-owners etc, with relatively high interest rates & drive them into the ground and leave room for the global corporates to 'farm' us.
Would cross boarder,multi currency loans be useful to money laundering?
http://www.activistpost.com/2013/09/whistleblower-hsbc-still-laundering…
As a former Anti-Money Laundering Officer at HSBC, Everett Stern was arguably never actually supposed to catch money laundering activity. Instead, with little training but an inclination to make a difference, Stern caught massive levels of fraud........to call for criminal charges and accountability over what he says is continued money laundering on the part of HSBC officials.
What the .....on earth is this ? . You must be joking, I have just checked the Calender , and its not 1st April .
Dont we have anti-money laundering rules for this very reason ?
How many Chinese actually even declare their foreign income to the IRD ?
Someone should ask the Minister for the numbers
Where will HSBC record the interest income for tax purposes here or in HK ?
NZ or HK remembering that HK is effectively a Tax haven for non -residents .
For example I note that Wilsons Parking Company which earns mega in NZ has a HK share register with Non resident shareholders
This has gone too far in my view
I have been going on for months about this activity of borrowing in China or HK at 2% to buy property here, and now its bubbled to the top .
Will LTVR ratios apply ?
There are 2, 000 , 000 , 000 people in China and if just 0,005 % did this they could buy the whole of New Zealand for a mere 2% interest cost .
Okay , I am oversimplifying this but its wrong on every level
I have been party to an HSBC loan of this type since 2007. The exchange rate variation has been huge over the last 6 years but interest rate which is reviewed quartely has been close to 2.5 % so I was able to cope with the cash flow impact quite easily i.e. the interest payments doubled when the $NZ halved against the Yen but we are back to being even now with exchange rate at over.80 against the Yen.
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