HSBC trumps all-comers with a new 3.35% fixed rate mortgage offer to kick-start the Spring real estate season. Savers will now come under even more pressure

HSBC trumps all-comers with a new 3.35% fixed rate mortgage offer to kick-start the Spring real estate season. Savers will now come under even more pressure

Our monitoring systems have picked up that HSBC is launching a hot new range of mortgage 'specials' for its Premier home loan offer.

The HSBC website now confirms that their new offer is 3.35% for all fixed terms from one to five years.

They are effective on Monday, September 2, 2019.

It is easily the lowest rates in the current mortgage market, and kicks off the spring real estate season in an aggressive fashion.

You qualify for HSBC Premier benefits if you have: a minimum of NZ$500,000 in loans; and/or a minimum of NZ$100,000 in savings and investments. Or If you are an overseas HSBC Premier customer you will automatically qualify for Premier customer status in New Zealand. After qualifying as a Premier customer, minimum home loan values no longer apply, although other home lending criteria may still need to be met. Existing HSBC Premier customers must borrow at least an additional NZ$100,000 to access these rates.

Earlier this week, most large banks cut rates and Kiwibank adopted a rate-set that was below 4% all the way out to a five year fixed term. No other major has followed that, but now HSBC has.

And the week also ended with wholesale swap rates dipping again, and again to all-time low levels.

For HSBC this is important because 40% of their total funding is wholesale ("related party" plus their debt security program) and less than half the rest is from local savings and term deposit balances. HSBC in New Zealand is a branch of HSBC in Hong Kong. To match them, other banks will now need to be even more aggressive with their savings and term deposit rate cuts. Both ANZ and BNZ pushed through such savings account cuts yesterday, although to levels that will be hard to be reduced further. Term deposit savers will now be in the cross-hairs. [This paragraph has been updated.]

Here is the full snapshot of the advertised fixed-term rates on offer from the key retail banks with the new HSBC offers included.

Fixed, below 80% LVR 6 mths  1 yr  18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
as at August 31, 2019 % % % % % % %
               
ANZ 4.29 3.65 3.99 3.59 3.99 4.85 4.95
ASB 4.29 3.65 3.75 3.59 3.89 4.19 4.29
4.79 3.69 4.55 3.75 3.99 4.35 4.45
Kiwibank 4.79 3.55   3.59 3.99 3.99 3.99
Westpac 4.99 3.65 4.79 3.59 3.99 4.35 4.45
               
Co-operative Bank 3.69 3.69 3.75 3.75 3.99 4.19 4.29
China Construction Bank 4.70 4.85   3.65 3.90 4.95 4.95
ICBC 5.15 3.79 3.79 3.75 3.99 4.29 4.39
HSBC 4.65 3.35 3.35 3.35 3.35 3.35 3.35
HSBC 4.29 3.69 3.69 3.69 3.99 4.49 4.49
  4.55 3.85 3.89 3.79 4.05 4.45 4.55

In addition to the above table, BNZ has a unique fixed seven year rate of 5.70%.

All carded, or advertised, term deposit rates for all financial institutions for terms of less than one year are here, and for terms of one-to-five years are here. And term PIE rates are here.

Fixed mortgage rates

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62 Comments

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Those rates look dodgy. Difficult to believe HSBC would go 1% below the nearest competitor at 5 years.

Edit. Wow, it's real. Going to cause massive dislocation in the mortgage market and knock on effects in the TD rates. Presume HSBC have decided to take the best customers of all the other banks or financially weaken their competition.

Next week will be very interesting. How are ANZ etc going to react to this and how much are TD rates going to be cut ? Huge potential effects on those living on their TD interest.

(DP)

Christmas is coming early this year!

Whoopee!

TTP

13
up

Hasn't it dawned on you yet that this is BAD NEWS?
This isn't good for past, present or future debtors as it implies the value of what they have, or will buy, is about to fall....Saving on mortgage interest rates costs is good in a Fool's Paradise.

The "Fools Paradise" was created long before under Nationals nine year reign allowing a slew of very dodgy overseas money to pour in from Asia, massively pushing up property prices. Now that China have clamped down on money laundering along with our Government that money tap has been effectively turned off which is why the banks having to be competitive to ensure that existing borrowers can still borrow as their property prices decline without that Asian money tap to feed property prices. See without lowering their mortgage rates, home prices in the low and middle brackets would rapidly decline causing negative equity and people would loose their homes. So the banks are doing the right thing - the person you should be blaming is Mr Key and the National Party.

People don’t lose their homes if they have negative equity unless they can’t service the mortgage. And it’s getting easier to service mortagages with these rates...

One person in one street loses their job; defaults and has to sell ( or just plain old, someone wants to cash out on that holding from 20 years ago; that Deceased Estate has to be realised and the beneficiaries want to sell at whatever they can get. There's a host of reasons why people 'have' to sell) - the whole street/suburb gets devalued.
It's the Contagion Effect that's coming.
And when 1,2 or 100 people in that same street/suburb want to refinance their debt ( say, after their 2 years fixed at 3.95% matures, and needs rolling) then guess what value the figure work is done at? I'll give you a clue, not original purchase value....

"It's the Contagion Effect that's coming" Yes well put. Also once Native Equity sets it, It's very hard and slow process for property prices to rise back to previous levels.

Native equity? Ihumatao? :)

If you remain with the same bank then there is no 'figure work'. The value of a property is only updated when loans are restructured. If you mean they cant move to HSBC, sure they may not, but so what, take a 3.55% 1 one year and smile all day as your rate just dropped 0.4%.

@ Iceman: I think you've answered you're own question there; "And it’s getting easier to service mortgages with these rates" The high risk of negative equity is precisely why the banks are acting quickly to lower their rates, so people can remortgage in a declining market.
Here you might want to read up on this subject: https://www.moneyadviceservice.org.uk/en/articles/negative-equity-what-i...

Hi bw,

It's not "bad news" at all!

I'll be able to buy my family and friends much better Christmas presents this year - so they'll all benefit......

How can that be bad?!

TTP

Much better you do a Scrooge as the value of the holdings backing your debt, deteriorates!
You might want to be able to buy yourself a better quality of consolation, liquid anesthetic.

Seriously:

The guys at HSBC etc KNOW what's coming. They are paid millions of dollars each, a year, to make decisions on where mortgage rates should be set and why.
To ignore their 'advice' is not something I would suggest any of us do, easily...,.

bw, the lower the interest rate, the higher the asset prices, it's simple

Lowering the interest rates doesn't increase the pool of available credit/funds to be lent though does it? Infact, if banks are reliant on retail investors to prop up their capital ratios then lowering of their yield could reduce the pool of available credit.

True but it sure reduces servicing costs.
It also redirects some money invested in TD's towards other assets, therefore increasing these assets' values.

Sorry that's wrong.

History disagrees with you, interest rates go up asset prices go down, interest rates go down & asset prices go up.
Example, interest rates dropped from 8% in 2008 to 5% in 2016, asset prices rose significantly

As usual you are over - simplifying and also being misleading.
What happened 01-08?
That's right interest rates increased and so did prices.
Low interest rates can help support housing markets, but there is not a causal relationship between them and prices.
Low interest rates usually mean an economy is weak. When an economy is weak, usually housing demand is weak.

Let's look at it from real example.
You buy a property with a mortgage at 5% interest and a yield of 5%, the interest drops to 3.5%,
- Are you better off? Yes, you have more actual cash in the pocket each month
- Are you likely to sell it because the interest dropped? No because you're making more money
- Will a buyer offer you more for your property than when interest were 5%? Clearly yes because the cashflow is better. If he applies the same logic of wanting the same yield as the mortgage interest rate, your property has gone up in value. (example the property returns $50k pa with a yield of 5% it's worth $1Mill, with a yield of 3.5% it's worth $1.428 Mill.

That's right. And as I said lower interest rates provide support to the housing market, all things being equal.
But it's a TOTALLY different thing from your assertion 'the lower the interest rate, the higher the asset prices, it's simple'.

You said history disagreed with me. Well, it doesn't as per the example 2001-2008.
I can throw in many more examples. How about the last 1-2 years in NZ, where we have had multiple cuts to interest rates and falling prices in Auckland?

There yo go Fritz, quote from David Chaston's 90 @ 9 Monday 2nd (the day after this thread:

"Residential property sales in Sydney and Melbourne have risen to near boom-time peaks as buyers respond to record-low interest rates. Auction clearance rates have jumped to over 80% and multiple bidders are common. Prices rose +1% in just the past month."

It IS as simple as that, but people love to could their thinking with lots of other noise that is of much lesser importance

I remember last week, when the fact prices in Auckland Central fell 13% in one month didn't matter. I guess the logic is different when prices rise huh.

The lower the front of the Titanic sank, the higher the back of the ship was raised, before the ship sank completely.

LMAO. Hadn't heard that one before, and it is good.

Yvil - I'm sure that 'BW' is RP reincarnated ?? We'll know for sure if he recommends TD's !!

Always possible, but if HSBC has a view that 5 years fixed is going below, say, 3% in the medium term, it makes sense to drag in what debtors you can, while you can.

That’s what I thought, Glitzy. But then again, I just had a look at house prices in the Hibiscus Coast area and it’s definitely a race to the bottom. Same applies to loan rates; if you’re having trouble finding takers you only have one way to go.

Fake news at best or has hsbc's website been hacked..

haha, yep if you don't like the news, just call them fake.

It's not about not liking the news, but more unbelievable that the same low rate being applied across all terms.. clearly shows how dire the situation is, but you wouldn't understand that..

2 -3 weeks ago I called rates would go to 3.30 to 3.35

I'm sure they will but I would imagine that swap rates would be nearer 50bps at that point. (Based on historical spreads).

Not far to go if they are 0.94% at the moment?
https://www.interest.co.nz/charts/interest-rates/swap-rates

Might take another 6 months or so at the current rate of decline. A couple more 25bp cuts to OCR should do the trick.

They will of course go even lower if the Ocr is cut again. If it goes to zero we could end up with mortgage rates as low as 2.25

Hey man, don't harsh my buzz.. i'm going to a wait another year, by then they should be negative.. the bank will help pay down my principle ;)

Wow at this rate of competitiveness mortgage rates will be in the 2% bracket before Christmas.

Very unlikely CJ

Website is up and confirming this. Caveats being minimum 100,000 new loan for existing customers. Minimum 500,000 for new.

Yep banks can be a bit sneaky with their caveats and con often use different methods to entice customers in. The usual one in that they use for their UK mortgages is to add a huge booking fee, Currently HSBC's UK two year fixed with 80% LVR has a mortgage rate of 1.54% but that's with a £999 booking fee, without the booking fee it's 1.94% for the 2 year fixed.
https://www.hsbc.co.uk/mortgages/our-rates/

Not totally beyond the realms of possibility. Look at the base rate in the UK over time. https://www.ngiresidential.co.uk/rise-and-fall-historical-interest-rates...

Although it’s nice to imagine what your payments would be on this rate, this is the last thing that would encourage me to buy. The powers-that-be must be very confident we’re entering crash territory, even if their talking heads say something else.

Sounds to me as though the Banks are having a push to get those last few new mortgages through the door before the OCR goes to zero and below. Once the rates turn negative then the profits could take a major hit so they'll have to rely on the dodgy derivatives market to bump up those profits.

Also on a different note the EU wants to extend Article 50 to avaid a no deal Brexit as Brussels appears to be cracking under pressure! So they've changed their tune. Source - The Telegraph UK but it's behind the paywall!

WOW, 3.35% for all terms 1 to 5 years !!! WOW

7 Rollovers then?! I see Westpac over the Tasman has a desperate new strategy to keep the lending going...

"Westpac will soon offer 35-year mortgages to people aged 35 years and younger - principal & interest loans targeted at owner-occupiers. This is a likely attempt to originate larger loan sizes by reducing debt repayments through longer time periods."

Can't afford $X repayment each week? How about we extend the loan to 35 years and make the repayments fit in at $7/8ths of X....How long until we get 'standard' 50 year , intergenerational mortgages?

When I was in Switzerland a few years back it seemed pretty normal for people there to have a "second" mortgage that never gets paid back. Primary mortgage over 25-30 years, and second mortgage interest-only for the remaining ~20 percent of house value to make the numbers work. It's not that crazy in a low interest rate environment. Mind you, less than 50% of people own homes there.

Indeed refactornz, I am Swiss and I lived in Switzerland till I was 27 old

Bloody genius!!!!!

A few more cycles like that and we'll be back to the landed gentry and the serfs..

Talking to people in the business community and the reps who they do with for product it is clear that the economy is going backwards. The Reserve Bank did not cut the OCR by .50per cent because they were feeling generous. They did it because they know exactly where the economy currently is and where it is going in the future. They are trying to give oxygen to an economy under more stress than we know. House prices in certain areas of NZ will come continue to fall and people in general will try to spend less and accumulate some cash for the proverbial rainy day. National who I voted for left a very weak economy based on rising house prices and consumer spending based on people feeling richer.

Gordon. I agree. It doesn't seam like people are getting the fist of how deep this is going to be. Slow downs mean less jobs, less jobs and everyone starts feeling the pain... well 90% do, the others are watching and waiting because they know, AS ALWAYS there will be a correction after the high. Thinking this one is going to be larger than anyone expects..

Gordon, it was a no brainer that the country’s economy wouldn’t look flash with the COL government in charge,
None of them have any business acumen and our leader loves being on the world stage saying look at me.
Kelvin and Winston have no idea.
Plenty of money still being made in real estate investment in Christchurch.
And no, people are not deserting ChCh. Quite the opposite Gordon.

National have no one in their caucus capable of leading them to victory in next years election. Jacinda has the necessary X factor to win it with ease. John Key had the X factor and won elections despite him having no substance. Being PM was just the next thing to achieve on his bucket list. Jacinda is surrounded by fools but with her at the helm they will win again.The Coalition will do another three years at least. Get used to it The Boy.

It's looking like this election will be hard fought. It all depends on how fast we are going to sink into recession PLUS what this coalition screws up / fails to deliver before the election.
Storm clouds nationally, Colalition history of screw ups and failure to delivers.
Jacinda's wow factor has slid and it's now time for her to deliver or wither. I don't think she can deliver and National will be there pointing that out every step of the way.
Throwing out money to the unwashed masses by the bucket load will be viewed as desperation by the middle class and upwards and WHOOP WHOOP to the poor me types.
Another thing to take into account is that the rumor is that Winston is throwing in the towel after this election. If it is a two horse race where NZF is the King maker, the best call is to go with National as there is a better chance that the incoming Gov't will have two to three terms in office. Labour has only one to two terms before we get the shits with them.

National will be there pointing out Labours failures, or which there are plenty, but then they pivot to point out their candidates and the electorate sighs and wanders off. Simon, Crusher Collins, Paula Bennet.. none of these are exactly inspiring leaders

I won't be surprised if the next election is very close and with poor turnout. The swing voters might decide to swing by the pub instead of the polling booth.

True, I think if Luxton joined National, it would swing the majority, if not, as you say

Remember 2007/08 when the "gurus" came out & said prices were going to crash. That was not too bad but I feel sorry for people they impacted on. Those that listened, misses out and went south. Those that bought went north. HSBC KNOWS correctly that interest rates will not only stay low for longer but will be there for a decade or two. So investors who are clever (same ones / types) that did not listen to the gurus/self appointed experts are doing the same again this time. If you are capable of funding your purchase with a reasonable level of safety, go for it, you will not regret going against the gurus, just as the investors from 208/09 have not regretted.

Mr Armstrong makes some very good points here -- "Ardern's struggle from now on will be to keep her head above the water" https://www.tvnz.co.nz/one-news/new-zealand/john-armstrongs-opinion-arde...

Most inept government NZ has ever had.
The fact is that NZ was in very good shape prior to being voted out and replaced by 3 loser parties.
They will fall on their faces thus coming year as they have very few in the COL that should be there.
Legalising marijuana etc just shows how crazy they really are and yet they want to ban cigarettes??

Has anyone meeting the qualifying criteria tested any of big 4's appetite to match / compete?

I'm not really sure what all the fuss is about. A few months back, maybe even 12 months back, HSBC were offering 3.67% for two years, if memory serves me correctly. Not sure why they took a breather from doing so. But they're back now, and the ORC is at least 75 points less than it was last time. The fact they're offering it on the longer terms means they are confident rates are at worst stable for years to come, but more likely headed further south. Bear in mind that in their UK stronghold they have been getting sub 2% for many years. And who knows where they get their funding from, somewhere much cheaper (e.g. Uk) or are they just printing their own...? And of course this is for lending at half a mil plus, which will exclude a lot of the market, especially outside of Auckland. And you're probably unlikely to get the ~$3k incentive other banks might offer you for joining.