HSBC has launched a 3.95% mortgage rate for Premier clients for an 18 month fixed term; lowest rate in two generations

HSBC has launched a 3.95% mortgage rate.

This is the lowest rate since the 3% 'State Advances' loans of the 1950s and early 1960s.

It is only the second time since then that any rate has started with a '3'. (Those old SALs were discounted to get veterans of World War Two into housing and weren't exactly commercial.)

HSBC's rate trumps the SBS Bank 'special' that was available for a limited time in November 2015 which carded at 3.99%.

At 3.95%, this new HSBC rate is a 'special' and is the first time they have offered an 18 month fixed term.

This offer is for Premier customers and comes with those criteria requirements:

A minimum value of NZD500,000 in home loans with HSBC in New Zealand (facility limit not outstanding balance); and/or

A minimum value of NZD100,000 in savings and investments with HSBC in New Zealand; and/or

If you're an overseas HSBC Premier customer, you'll automatically qualify for Premier customer status in New Zealand

Note: Once you become a qualified HSBC Premier customer, minimum home loan values no longer apply, although other home lending criteria may still need to be met.

HSBC has also cut other rates, including is six month rate to 4.85%, its two year rate is down by -10 bps to 4.39%, its three year rate is also down by -40 bps to 4.59%, and its four year fixed rate is now 4.79%, down -20 bps.

That new 4.79% four year rate is also now at a market-leading level. HSBC also offer market leading rates for one and five year terms.

In a statement issued with the notice of rate changes, Glen Tonks, Head of Retail Banking and Wealth Management at HSBC in New Zealand said, "In these uncertain times we are pleased to be able to provide our customers with certainty over the short-to-medium term by offering this 3.95% p.a. 18-month fixed mortgage, the lowest rate in over 50 years”.

The opportunity for sub- 4% home loans has opened up quickly with the recent sharp fall in wholesale interest rates. These fell sharply last week. The scale of these cumulative falls has been impressive, although limiting bank options somewhat has been the recent run up in credit spreads. However, the net effect has been to lower wholesale money costs.

It is not such a stretch now for banks to pitch their carded rates under 4% and it seems likely that more will do it.

Despite the HSBC Premier criteria, today's move will pressure other banks as customers and prospects shift their sights when negotiating with banks. Borrowers with low LVRs and A grade financials will no doubt be the first to benefit from these new lower rates.

Anecdotal evidence suggests sub- 4% rates are being offered more often in individual negotiations.

Today, mortgage rates now compare across all banks as follows:

below 80% LVR	1 yr	18mth	2 yrs	3 yrs	4 yrs	5 yrs
	%	%	%	%	%	%
	4.39	4.95	4.49	5.10	5.25	5.35
	4.39	4.49	4.49	4.75	5.15	5.25
	4.39	5.09	4.39	4.49	5.40	5.50
	4.39		4.49	4.85	5.25	5.35
	4.39	4.95	4.39	4.80	5.25	5.35
	4.39	4.39	4.49	4.75	4.99	5.15
	4.25	3.95	4.39	4.59	4.79	4.99
	4.35	4.35	4.35	4.65		5.29
	4.35	4.69	4.29	4.79	5.35	5.35

In addition, BNZ has a fixed seven year rate of 5.90%, while TSB Bank offers a fixed ten year rate at 5.75%.