New carded rate offers from HSBC set them 10 to 30 basis points below any other home loan rival, making HSBC an attractive and unique comparator

HSBC is back, reclaiming the low rate position for all mortgage rates for fixed terms of 1 year and longer.

After raising its 3.85% eighteen month rate to 4.19% about two weeks ago, it has reset its who offer card lower again.

Now it is offering carded rates for one year and 18 months fixed at 3.99%.

This is the lowest rate offer in the home loan market at present.

HSBC has trimmed -10 bps from its two year fixed card, setting their new rate at 4.19%, also the lowest for this term in the current market.

The same it true for three years fixed (down -20 bps to 4.69%), four years fixed (down -30 bps to 4.99%), and five years fixed is now at 5.29%, also a reduction of -30 bps.

These changes are the first for any bank in the past month (HSBC's 4.19% change excepting).

Wholesale swap rates have been very stable recently, although in the past few days we have seen a steady small set of across the board falls, resulting in a bear steepening on the rate curve (that is, the shorter terms have fallen more than the longer terms).

It is unlikely however that HSBCs August cuts are motivated by these moves. More likely they are taking advantage of these conditions and their low cost base to press their competitive advantage in mortgages to grow market share. HSBC's market share is small but their mortgage book has grown noticeably as a result of their uniquely low interest rate pricing.

See all banks' carded, or advertised, home loan interest rates here.

Here is the full snapshot of the fixed-term rates on offer from the key retail banks.

below 80% LVR 6 mths  1 yr  18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
as at July 9, 2018 % % % % % % %
               
4.99 4.29 5.15 4.49 4.85 5.85 5.99
ASB 4.95 4.29 4.39 4.49 4.79 5.39 5.59
5.35 4.29 5.05 4.49 4.85 5.89 6.09
Kiwibank 4.99 4.19   4.39 4.85 5.19 5.39
Westpac 5.25 4.29 5.15 4.49 4.85 5.89 5.59
               
4.80 4.24 4.45 4.49 4.85 5.39 5.59
HSBC 4.85 3.99 3.99 4.19 4.69 4.99 5.29
HSBC 4.99 4.19 4.49 4.49 4.85 5.39 5.55
4.85 4.24 4.35 4.49 4.85 5.55 5.69

In addition to the above table, BNZ has a fixed seven year rate which is 6.15%.

And TSB still has a 10-year fixed rate of 6.20%.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

19 Comments

Makes you wonder why variable rates are so high still? Shouldn't they be similar to the one year rate?

Yes! Why are variable rates so high compared to fixed?

They don't want you to pay off faster

@cjmain ........... to explain this phenomenon you need to look at the Bank's funding mix , and its awfully complicated for someone like me

But in a nutshell :-

They take long -term deposits ( usually from overseas clients) at low rates and after adding a margin lend it out to fixed -term mortgages a lower rates .

Rates in some parts of Asia range from ZERO to 1 % so money is invested here to get the yield we offer

The floating rate is more closely aligned to the NZ OCR as they funding of floating mortgages is done through domestic savings .

While that is not the whole story , its the essence of it .

Yes makes you wonder. RBA OCR is 1.5% and ANZ Australia recently reduced their basic variable principal and interest home rate for owner-occupiers by 0.34 percentage points to 3.65 per cent. For better than 80% LVR

Hi David
Do you happen to know what the loan to value requirements are and multiple of earning limits for the HSBC offer?

No I don't. But for such good rates, I am sure they will be looking for low risk customers and expecting a low-ish LVR, certainly under 80%. HSBC Premier lending (which this is) comes with qualification requirements. According to their website, this includes:

Customers must provide an owner occupied property as part of the security.

Interest rates are current as at Wednesday August 1, 2018 and are subject to change or withdrawal without notice. HSBC Premier qualification criteria applies (e.g. combined lending of NZD500,000 or more or NZD100,000 of savings and investments with HSBC). Early repayment fees may apply to fixed rate loans.

Worthwhile giving HSBC a call

Yep Yvil

They are tough on who they will lend to, but they'll clean up the best borrowers over the next couple of years and leave the others scratching the bottom of the barrel for the dregs. I don't believe that HSBC are part of the OBR as are incorporated abroad, so probably good to hold cash funds with too so long as they have been as prudent in Asia as they have been in Europe. I believe that to be the case with them but maybe David can clarify. History tells me that they'll protect themselves from housing market swings with vendors who hold lots of equity should things turn to custard.. In UK they were unbeatable last 10 years if you held over 40% equity but were very thorough on property valuation and criteria.

Interesting. If true, potentially a safer place to stash cash.

If you want abysmal returns. Their TD rates are TERRIBLE... that's why their HL fixed rates are so low. Although, I note their floating is worse than most majors.

Considering how many fines they have had for taking money from criminals and how they barely kept their license in the USA, totally a safe pair of hands.

Clearly drug lords aren't too picky on the interest they receive for their cash.

Well, yeah...no one has accused them of being ethical or not laundering money for Mexican drug cartels. What we're discussing is whether that makes them less likely to face an OBR event or more?

Good news, though. They're "drawing a line under" their punishments for this behaviour.
https://www.reuters.com/article/us-hsbc-usa/hsbc-draws-line-under-mexica...

Bendigo Bank 4.04% 2 year fixed, 4.4% floating.

There are T&C'S however .

One of HSBC 's Business heads visited our practice a few months ago with a sales pitch , (they love professionals )

Their product offering is impressive , but HSBC require minimum mortgage , and its quite a big number if I recall , and they dont really want you to make Capital redemptions below the threshold

I recall they also want your transactional Banking ( which is done through a third party Bank in NZ ) and they want you to use other banking products of theirs .

I still prefer on -shore banks with a branch everywhere in NZ

WHATEVER YOU DO , here's some free advice .

Use this period of the lowest interest rates in our lifetime to pay off as much of your mortgage as you possibly can .

Essentially , if you have a floating mortgage with an equity access facility , you should not even bother to have a savings account on which you are paying tax on interest earned

Every $ put into your mortgage is earning you the mortgage interest rate TAX FREE .

Your Mortgage account is the best TAX FREE saving account anywhere on the planet .

All it takes is a bit of discipline to start and keep doing it

Best advice in the World Boatman! Gingerninja advised me the same a few months back, she's a real star.

For an example, have a play with this calculator folks:
https://www.westpac.co.nz/home-loans/calculators/choices-offset-calculator/
And don't forget to click on the "Show me" link, to reveal exactly how soon you can be mortgage free! With discipline, you can get an effective mortgage rate as low as 1 or 2%

I wish we had a calculator like this on the interest.co site. I want to dynamically change the floating rate in that WBC calculator for better fine tuning.

Why bother fast tracking your mortgage repayments when interest rates will be low forever.
Diversify your investments while cheap money finances your home.
Why die with all your equity in your house? Just for the kids!