Black Friday specials come to mortgage rates

HSBC reprises its lowest-ever mortgage rate of 3.79% making that offer 16 basis points better than any other bank for a one year fixed term

22nd Nov 18, 6:07pm by David Chaston

HSBC has updated its website to reduce its special one year fixed mortgage rate by -6 basis points.

The new rate is 3.79%, equaling its own lowest-ever rate in the August to October period in 2016.

No other bank has come close to this level.

This means the HSBC Premier one year rate is -16 bps lower than the next lowest offer of 3.95%, a rate adopted by four other banks.

HSBC is the usual offerer of the lowest rate in the New Zealand home loan market.

It is also the lowest offerer in Australia where it has a 3.70% rate for one year fixed.

Over the past month, swap rates have been stable, especially at the short end. On Thursday the New Zealand one year swap rate ended at 2.04%. (In Australia it is at 1.97% and that difference reconciles the trans-Tasman offers for HSBC).

HSBC Premier has some strict conditions and not every borrower would qualify.

The criteria is:

• A minimum value of NZ$500,000 in home loans with HSBC in New Zealand (facility limit not outstanding balance); and/or

• A minimum value of NZ$100,000 in savings and investments with HSBC in New Zealand; and/or

• If you are an overseas HSBC Premier customer you will automatically qualify for Premier customer status in New Zealand.

Existing HSBC Premier customer must borrow at least an additional NZ$100,000 to qualify.

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 November 22, 2018	%	%	%	%	%	%	%

ANZ	4.99	3.95	4.85	4.29	4.49	5.55	5.69
	4.95	3.95	4.29	4.29	4.49	4.95	5.09
	4.99	4.15	4.79	3.99	4.49	5.19	5.39
	4.99	4.05		4.29	4.49	4.99	5.09
	4.99	3.95	4.15	4.29	4.49	5.29	4.99

	4.50	4.10	4.29	4.35	4.49	4.99	5.15
	4.85	3.79	3.85	4.19	4.69	4.99	5.29
	4.99	4.19	4.49	3.95	4.49	4.89	4.89
	4.85	3.95	4.19	4.19	4.49	4.95	4.99

In addition to the above table, BNZ has a fixed seven year rate of 5.95%.

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

Fixed mortgage rates

Select chart tabs

Source: interest.co.nz

Source:

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67 Comments

by Retired-Poppy | 22nd Nov 18, 6:18pm 1542863895

Banks, you are now hard out injecting more adrenaline to sustain this bubble. On this race to the bottom, how low can you go collectively playing "limbo" under the bar?

Nic, you might be right, 3.5% by Christmas?

by Nic Johnson | 22nd Nov 18, 6:23pm 1542864182

All those clever buggers who re-financed last week at 3.95% will be spitting the dummy tonight!

Wait for Boxing Day - how low will they go to underpin the removal of the marginal buyer?

by cjmain | 22nd Nov 18, 10:40pm 1542879606

Nic with little movement in swaps break fees will be tiny

by Nic Johnson | 22nd Nov 18, 10:48pm 1542880138

very likely.... the banks however will only be competing for the best prospects... Can I suggest that this is the start of the 'borrower' beauty parade...

by Yvil | 23rd Nov 18, 8:53am 1542916430

Nic, I'm still happy to make a bet that the main banks will NOT offer mortgage rates at 3.5% by this Christmas, as you claimed previously if you're up for it?

by Henry_Tull | 23rd Nov 18, 9:12am 1542917547

Depends who for.
I see less people able to win credit, meaning if all the successful loan applications from 2 years ago were processed now, many would be declined, many would get less money.

If there is this smaller pool of lendable/successful borrowers, expect the banks to pin their ears back, rates, fees, costs will all be pulled, pushed and probably squeezed.
My feeling is the "banks" really want credit growth to continue.

I hear of existing borrowers with capacity being offered great deals, and a selection of investment properties by-the-way..
On TV the FHB is being heavily advertised at, at TV news time, to hook em in.

Y what are you seeing?

by Yvil | 23rd Nov 18, 9:50am 1542919804

No need to make it complicated. My bet is that the NZ main banks, (ANZ, ASB, BNZ, Westpac & Kiwibank) will NOT advertise any mortgage rates for any duration for 3.5% (or lower) by Xmas 2018, as Nic claimed.
Simple and straightforward.

Nic?

by Retired-Poppy | 23rd Nov 18, 11:37am 1542926246

Yvil, can you publish the link to where Nic commented (all) major banks would be offering 3.5% mortgage rates by Christmas? Simple and straightforward.

by Yvil | 23rd Nov 18, 11:56am 1542927381

Why? In your 1st post above you state yourself, quoting you:

"Nic, you might be right, 3.5% by Christmas?"

Also I'm not saying "all" major banks will offer 3.5%, if any single one does, I'm happy to admit that I'm wrong

by MisterB | 23rd Nov 18, 6:18pm 1542950307

I agree.

There is zero chance of a main bank, any of them, doing 3.50% interest rates by Christmas.

Not even HSBC will!

by Squishy | 22nd Nov 18, 7:06pm 1542866816

Housing is our only industry, we need rates to keep trending downwards so the music doesn't stop.

by Nic Johnson | 22nd Nov 18, 10:55pm 1542880510

even playing the music in slow motion presents an issue now Squishy... if the rate of accumulation of housing debt slows, that's it! ... There is still time a bit more time for the piper to play a bit longer, but we're into the last couple of pages of the music book.

Don't want to upset the editors again but it is worth looking at 'Are icebergs fluffy' DFA.

by Yvil | 23rd Nov 18, 8:52am 1542916352

Housing & Tourism

by bilbo | 23rd Nov 18, 3:23pm 1542939823

By "housing" you mean hocking off bits of land. Nobody buys for the quality of our damp Fletchers quality housing do they?
Tourism merely provides cheap hospitality jobs cleaning sheets in hotels.

Selling out the private parts for immediate paper money. Just like prostitution these "industries" are degrading and show how desperate our economy is.

by Yvil | 24th Nov 18, 1:33pm 1543019610

Tourism actually brings money into NZ, lots of it, not the other way around

by tothepoint - d… | 22nd Nov 18, 7:21pm 1542867682

These low interest rates are good news for house buyers/investors.

Even better news is that rates may decline further - at a time of low unemployment and rising wages.

TTP

by Nic Johnson | 22nd Nov 18, 10:28pm 1542878937

TTP
Save a couple of hundred dollars a month as an off-set against the couple of thousand capital loss each month..
'Great news' said the patient to the doctor, 'So I'll get to keep the legs?'
'From the knees up!' said the doctor... 'But we will give you ice-cream in hospital while you recover'
'Wonderful news....' said the patient (very patient investor)

by tothepoint - d… | 22nd Nov 18, 11:00pm 1542880859

"Save a couple of hundred dollars a month as an off-set against the couple of thousand capital loss each month."

Sorry - but that's not the case for NZ median house prices. (See the latest REINZ figures.)

TTP

by MisterB | 23rd Nov 18, 6:17pm 1542950250

How about you learn the data properly though. NZ median SALES prices for REINZ is NOT the same as house prices going up on a like for like basis.

It very much depends on the mix of properties sold vs the base population of properties in an area

interesting article
https://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=12…

by Independent_Observer | 23rd Nov 18, 12:54pm 1542930854

TTP - it's more like giving an addict another hit instead of sending them to rehab. But hey, if one likes getting high then why judge? Let them live the dream yeah?

by Narrabeen Boy | 22nd Nov 18, 8:23pm 1542871381

The only way i see house prices dropping substantially is when interest rates track way higher.Otherwise everyone can afford there re payments and just hold on a few years until the next up swing in prices.

by Yvil | 23rd Nov 18, 9:00am 1542916802

Hallelujah N B, you're one of the few who understands (the simplicity of) the housing market. Most get distracted by irrelevant "noise", i.e. FBB, OZ banks, CGT, ringfencing losses etc...

by Nic Johnson | 22nd Nov 18, 6:23pm 1542864195

For anyone who wants to understand a bit about the impact of the marginal buyer there is a very good youtube clip about New Zealand housing from DFA which I am not allowed to link here...

by Theclap123 | 22nd Nov 18, 8:42pm 1542872556

That is "unfortunate". Thankfully Nic, I understand from yr previous posts, cheers. Where is that comprehensive article tho? That would be great for us plebs :)

by Nic Johnson | 22nd Nov 18, 9:54pm 1542876845

More from the New Zealand Housing Market - by Digital Finance Analytics.

by cmat | 23rd Nov 18, 1:33pm 1542933226

Great analysis.

I've had discussions with friends about the impact of "marginal buyers" on price for years.

by Nic Johnson | 22nd Nov 18, 6:31pm 1542864668

I'm starting to question how much money HSBC have 'created' - lowest rate in Australia's collapsing housing market and the lowest rates here too. Anyone with them already and have they contacted you to re-fix lower?

by David Chaston | 23rd Nov 18, 6:20am 1542907208

Probably very low. Their mortgage book in New Zealand is $1.7 bln. (Maybe about 4000 loans?) A number of years ago it was about $2.5 bln. They lost market share over a number of years and it shrank to under $1.5 bln. Recently it has stabilised and started to move up but not in any fast fashion. Today they have a 0.7% share (ie 0.007) of the $243 bln market that the ten banks listed above represent. Growth overall is about +5.8% pa and it has been at that level for about a year. (Pror to that it was higher.)

by Frostwind | 23rd Nov 18, 11:10am 1542924602

Love to see the author engaging with the readers here, especially with informative post and facts and figures.

I just want to add that, HSBC is the biggest shareholders for the big 4 Australian banks, followed by JP Morgan.

by Pragmatist | 23rd Nov 18, 11:19am 1542925154

No, those are nominee entities.

Nominees hold shares for their customers. The true owner is not HSBC/JP Morgan etc. themselves. It makes it very hard to know who is actually the biggest owner of the Aussie banks.

by David Chaston | 23rd Nov 18, 11:21am 1542925278

The ownership claim is a superficial misunderstanding. JPMorgan and HSBC have large custodial business divisions, holding shares for a very wide range of fund managers and other professional investors. As such, they are not the beneficial owners and don't have the rights of ownership. They are just custodians. (The RBNZ also has a custodian business and that causes some people to mistakenly claim they own some large NZ companies as well.) This is a misunderstanding based on an element of financial illiteracy by folks who conclusion-jump on how the custodial business works.

by MisterB | 23rd Nov 18, 6:20pm 1542950422

#micdrop

by Andrewj | 22nd Nov 18, 6:36pm 1542864981

To investigate, we test the received belief that lower interest rates result in higher growth and higher rates result in lower growth. Examining the relationship between 3-month and 10-year benchmark rates and nominal GDP growth over half a century in four of the five largest economies we find that interest rates follow GDP growth and are consistently positively correlated with growth. If policy-makers really aimed at setting rates consistent with a recovery, they would need to raise them. We conclude that conventional monetary policy as operated by central banks for the past half-century is fundamentally flawed. Policy-makers had better focus on the quantity variables that cause growth.

https://www.sciencedirect.com/science/article/pii/S0921800916307510

by PatrickW | 22nd Nov 18, 7:43pm 1542868986

Oh My Goodness... perhaps history will show that GFC taught us nothing other then exacerbating the PFC "Pacific Financial Crisis".

by PropertyPrices2Fall | 22nd Nov 18, 8:16pm 1542870996

DESPERATION

by PropertyPrices2Fall | 22nd Nov 18, 8:17pm 1542871072

10% sale rate at tomorrow's b and ts auctions?

by PropertyPrices2Fall | 22nd Nov 18, 8:41pm 1542872466

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…

by MortgageBelt | 22nd Nov 18, 9:04pm 1542873840

2.99% for 2019?

by Nic Johnson | 22nd Nov 18, 9:55pm 1542876919

For anyone with a household income of over $500,000 and a 40% equity position.

by CJ099 | 23rd Nov 18, 7:23am 1542911028

I'd hardly call it prices slashed. NZ mortgage rates have still got far further to fall in comparison to other Western countries. Take the UK for example; HSBC are offering 1.74% for a 2 year fixed in the UK.

Take a look for yourself: https://personal.hsbc.co.uk/mortgages/our-rates/

by denpal | 23rd Nov 18, 7:46am 1542912400

This is insane, I see they offer two years fixed at 1.54% for 60%L/V. That is getting close to free money at least from the NZ perspective. Given the massive profits of our banks seems like there is plenty of room to sharpen their pencils.

by CJ099 | 23rd Nov 18, 8:02am 1542913342

Yep just goes to show how ripped off NZ customers are with mortgage rates. Thing is we can stave off a property crash simply by lowering mortgage rates to all people to pay off their mortgages.

If you check out other mortgage rates around the Western world you'll find that we are paying the highest mortgage rates.

Remember we have had 10 years of foreign buyers how could access incredibly low mortgage rates at around 1% so not surprisingly Auckland property prices went through the roof and local buyers couldn't keep up.

Here's another website for you to have a comparison. www.moneysupermarket.co.uk

by bw | 23rd Nov 18, 8:03am 1542913435

Not only the Banks! R/E agents' fees here are...well, profitable for them!
"The average UK estate agent fee is 1.42% of the final selling price (inc VAT)"..and that rate can be negotiated....

by CJ099 | 23rd Nov 18, 8:03am 1542913434

Yeah I sold my UK house a number of years ago for 1% commission that included all the marketing costs etc...

by Yvil | 23rd Nov 18, 9:09am 1542917384

That's right CJ, unlike a lot of other developped countries, NZ still has room to lower interest rates and that is one of the main reasons why I don't believe a house price "crash" is imminent here. A small drop of up to 10% nationally is quite possible but that is irrelevant after years of such strong growth.

by Zachary Smith | 23rd Nov 18, 9:19am 1542917964

I believe you are right Yvil. Things are pretty stable and far from being on the brink of disaster.

It's almost like everyone is being talked into a 'crisis imminent' mode so that things can correct a bit in a stable way. No risky mortgages and concentrating on consolidating positions. It's probably a good strategy thing to have this frame of mind although you wont get rich, just nice and comfortable.

by CJ099 | 23rd Nov 18, 10:04am 1542920674

Zachary I wouldn't hold your breath on getting your multi million dollar CV value on sale price. Ordinary folks can't afford that no matter how low the mortgage rates go. And the AML regulations are being introduced in January.

by bw | 23rd Nov 18, 9:36am 1542918988

" NZ still has room to lower interest rates"
Mathematically, yes, and that will happen. But economically? No.
The lower rates go, the further down the cul-de-sac of economic hardship we go. I know you don't see it that way, but the fact that we have had to follow the rest of the World into the monetary trap shows just how fragile our economy is at heart.
There won't be a Crash? I hope not, but as I see it it's on the cards now, and has been for the last 6 years since we let the property cat escape from the bag. The only difference now is that we are closer to that event occurring than we were in 2012.

by bilbo | 23rd Nov 18, 9:18am 1542917919

It also goes to show how ripped off NZers are for housing. We have the most expensive houses AND the most expensive debt.

No property taxes, ripoff building merchants and miles of red tape.

by MisterB | 24th Nov 18, 8:33am 1543001630

remember the deposit rates there are also slim to none. There are deposit to loan ratios the banks need to maintain.

by David Chaston | 23rd Nov 18, 11:30am 1542925807

by bw | 23rd Nov 18, 11:40am 1542926453

It is done, but it's unhedged.
Some portion of a banks funding is often done unhedged as Treasurers assess the implications of currency risk, but it's not an everyday thing, nor should it be, as many borrowers in Asia, and elsewhere, are beginning to realise.

by MisterB | 23rd Nov 18, 6:22pm 1542950551

evidence for this comment? No treasurer worth his salt would do unhedged funding for mortgages

by RickStrauss | 23rd Nov 18, 11:49am 1542926942

I was wondering along these lines. Are we really ever likely to see that low of interest rates without the economic muscle of those countries compared? New Zealand as a country has to pay higher to compete for international lenders, as I understand it, which is why we won't see the same very low rates as stronger economies.

Or do people want the government to borrow money at a higher rate and lend it to them at a lower rate again? I.e. not standing on one's own two feet.

by CJ099 | 24th Nov 18, 12:03pm 1543014221

Actually David I think you're missing my point. It's more to do with WHY the suddenly flurry in banks reducing their mortgage rates? And no I didn't mean to imply that people were able to borrow cheaper mortgage rates from the UK. I know they can't because I tried that a number of years ago for buying property in NZ. However before the GFC most UK banks were lending for overseas buying mostly in Europe.

Though what is an undeniable fact is that we have had a lot of money pouring in from Asia for many years and not all by standard means (Shadow banking etc). Now that that tap has mostly been turned off, banks are now more concerned about how the property market is declining both here and in Oz.

Once negative equity take effect in a declining property market that resulting in people not being able to renew their mortgages and that's a far more explosive mix than just wholesale rates.

Conclusion: Banks are dropping their rates to allow buyers to continue to take out more debt reducing mortgage rates to keep property prices stable (Or stagnant in Auckland's case).
If the property market drops too rapidly that causes wide scale negative equity and eventual repossessions (mortgagees).

by MisterB | 24th Nov 18, 8:22am 1543000948

And lovely term deposit rates of 0.65% fixed for 1 year. Nice

I also note the example 1.74% HL has a 999 pound booking fee - ouch.

by bw | 24th Nov 18, 9:07am 1543003629

A bit like the $250 'booking fee' to get 'interest-free' terms on $5,000 purchases at Harvey Norman then!

by Carlos67 | 23rd Nov 18, 9:40am 1542919232

I'm waiting for the next "Black Friday" and I think its only a matter of months away now.

by Greg-Hamilton | 23rd Nov 18, 1:53pm 1542934439

I see many articles in mainstream media regarding easing LVR restrictions .. :-o - because the home prices have stabilized .. because the credit growth rate has been slowed ( credit is still growing ). can understand why bank vying for loose LVR ..but why should reserve bank should do this ? what will be their motivation to loosen LVR

by Nic Johnson | 24th Nov 18, 1:15pm 1543018532

Edit

by MisterB | 24th Nov 18, 8:13am 1543000422

What is wrong with you? I mean other than it being 1am when you did your rant, unless of course you are an overseas troll, which is of course possible, given all your comments relate to UK stuff.

Even for you, this is pretty vitriolic. Greg raises a perfectly good point about what rationale there could be for the RBNZ to lift a prudent regulatory policy like speed limits.

by Zachary Smith | 24th Nov 18, 8:22am 1543000931

It is a mad comment. Nic probably wont remember writing it.

by MisterB | 24th Nov 18, 8:22am 1543000975

#drunkenstupor

by Greg-Hamilton | 24th Nov 18, 10:58am 1543010336

Which bank do you represent Greg?

Gone too far Nic :-o what made u think that I'm a banker? I would like to be in their position though, seeing their power to control everything..
But I'm just a kid as u thought.. saving hard.. paying 33% tax on my 3% return on term deposits.

by dictator | 23rd Nov 18, 2:17pm 1542935821

What these new low mortgage rates remind me of is the credit score system in the US. When there aren't enough people to lend to because their credit scores are too low they bump up all the credit scores so there's a larger market. It's almost like they are trying to keep existing mortgages ticking over (although I'm pretty sure internally it's all about market share).

by Grant A | 24th Nov 18, 11:49am 1543013354

About a less than 80bps net margin to the bank which is unsustainable long-term so I'd say grab it now but don't dare think about budgeted on it into the future

by An_Observation | 24th Nov 18, 6:59pm 1543039176

SBS now doing 3.95 for 2 years?