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HSBC grabs the 'lowest rate' mantle with sharp cuts for all terms for its Premier offers, none over 3%, and the lowest home loan rate ever at 2.60% for a one year fixed term

Personal Finance
HSBC grabs the 'lowest rate' mantle with sharp cuts for all terms for its Premier offers, none over 3%, and the lowest home loan rate ever at 2.60% for a one year fixed term
25th May 20, 4:03pm by David Chaston

HSBC has cut rates aggressively, and now has the lowest fixed home loan rate offer for every term.

The feature of their new Premier rate card is 2.60% fixed for one year.

But they also have the lowest rate for every other term, and share it with only BNZ at 2.99% for five years fixed.

This is now getting seriously low, although qualifying for the HSBC Premier offers isn't for everyone.

However, if you can meet these requirements, the interest rate load on your mortgage payment will fall away to historically low levels.

The new HSBC six month rate is now 2.95% (-54 bps). For eighteen months and two years fixed its is down to 2.65% (reductions of -20 bps and -24 bps respectively).

For three years the new rate is 2.80% (-70 bps), for four years now 2.89% (-71 bps) and for five years it is 2.99% (-0.71 bps).

To qualify for HSBC Premier, you need to meet the following qualifying criteria:

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

After qualifying as a HSBC Premier customer, minimum home loan values no longer apply, although other home lending criteria may still need to be met.

These newly announced HSBC rates become effective on Thursday, May 28, 2020.

One useful way to make sense of these new lower rates is to use our full-function mortgage calculators. 

And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options.

Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at this time.

Fixed, below 80% LVR 6 mths  1 yr  18 mth  2 yrs   3 yrs  4 yrs  5 yrs 
as at May 25, 2020 % % % % % % %
               
ANZ 3.65 2.79 3.05 2.95 3.35 4.45 4.55
ASB 3.55 2.85 3.05 2.69 3.35 3.45 3.55
4.79 2.79 2.99 2.99 2.99 2.99 2.99
Kiwibank 4.29 2.65   2.79 3.25 3.45 3.55
Westpac 4.79 2.79 4.25 2.79 3.39 3.49 3.59
               
Bank of China 3.89 2.79 2.89 2.89 3.19 3.79 3.89
China Construction Bank 4.70 2.80   2.85 3.19 3.30 3.45
Co-operative Bank 3.09 3.09 3.35 3.35 3.69 3.79 3.89
Heartland Bank   2.89   2.97 3.39    
HSBC [May 28, 2020] 2.95
2.60
2.65
2.65
2.80
2.89
2.99
ICBC 4.29 3.18 3.18 3.18 3.20 3.99 3.99
SBS Bank 3.89 2.99 3.05 3.05 3.69 3.79 3.89
  3.39 2.79 2.99 2.99 3.39 3.79 3.89

In addition to the above table, BNZ has a unique fixed seven year rate of 5.20%.

Fixed mortgage rates

Select chart tabs

Source: interest.co.nz
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52 Comments

by  Fritz  |  25th May 20, 4:27pm 1590380854

'this is now getting seriously low'
Yes by NZ standards, not by international standards.
Like many things in this country, we have been paying well above what many other developed countries have been paying over the past 5-10 years.
For recent FHBs like myself, this brave new world is most welcome, especially when we have had to pay such high prices to get into the market.

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by  MisterB  |  25th May 20, 4:44pm 1590381847

To be fair, retail term depo rates are much higher than anywhere else too. I am not sure retirees are clamoring for sub 1% term deposit rates.

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by  Jarlaith  |  26th May 20, 7:04am 1590433474

Perhaps they should diversify?

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by  Spectators  |  26th May 20, 11:01am 1590447699

As a recent FHB it's probable that you paid way over odds for your home because of this low interest rate environment you seem pleased about. Low interest rates mean lower interest payments which means increased serviceability which translates into increased borrowing capacity which leads to higher offers on houses which results in higher houses prices. Repeat this slosh for say 12 years (08' - 20') and you get FHBs taking on huge amounts of debt to pay for lower quartile houses that are so far priced from their fundamental values. House prices have been skyrocketing because there's always been a sucker willing to pay more (borrow more) for your house then you did. What happens when you get to a point where the 'next sucker' doesn't exist because everyone's too indebted and cannot borrow more despite their eager willingness to? The government keeps the debt wheel turning by pushing lower interest rates so we can keep getting paper rich by selling and buying non-productive houses to each other.

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by  Glitzy  |  25th May 20, 5:41pm 1590385303

Looking at the swaps market it seems there is still some dry powder to cut rates a bit more. Will the interesting to see if the mid maturity curve pricing continues to fall ~ if so I'd imagine we will see rates below 2% within the next 12 months.

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by  Te Kooti  |  25th May 20, 6:01pm 1590386474

We will have sub 2% within 6 weeks.

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by  realterms  |  25th May 20, 6:41pm 1590388909

A bold prediction. I wouldn't bet against it.

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by  tim52  |  25th May 20, 6:59pm 1590389997

Do the banks think its that bad right now? I would have though they would wait till after the election and the end of the wage subsidy for that go signal.

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by  Glitzy  |  25th May 20, 7:16pm 1590391015

I'd don't think it's good or bad per se, it's just a function of the decline in the govt bond yields which are dragging down the swaps curve and hence mortgage rates.

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by  tim52  |  25th May 20, 8:03pm 1590393822

So you think this round of specifically timed mortgage rate cuts are purely banks being competitive? Could be.
The decline in govt bond yields is due to aggressive RBNZ intervention so its only going to go further if RBNZ thinks its bad enough (not just in the housing market) to make another QE announcement.
2% (-0.7%) six weeks after significant cuts would require both RBNZ assistance and a massive drop off in bank loan growth. The only significant event in the next six weeks to kick this off would be an RBNZ rate change (or maybe a level 1 auction room).

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by  Lanthanide  |  26th May 20, 8:28am 1590438494

6 months maybe.

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by  CJ099  |  25th May 20, 5:46pm 1590385603

Problem is with mortgage rates dropping so quickly they'll have to stay low for the next decade or so. So you can kiss your retirement savings good bye. We really need to end this property Ponzi scheme if NZ is going to be able to rebuild it's economy.

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by  Houseworks  |  25th May 20, 6:46pm 1590389187

Sorry to disappoint you CJ but property prices will never deflate to a level you'd be happy with. Just get used to it and learn to live with it. Much like dealing with climate change we adapt or die (or slowly waste away)

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by  Independent_Observer  |  25th May 20, 6:56pm 1590389767

You a member of the flat earth society as well?

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by  Houseworks  |  25th May 20, 7:26pm 1590391564

What's the upshot of the thread above (sub 2 percent mortgage rates)... I say more buyers. Hows your flat earth?

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by  bw  |  25th May 20, 7:43pm 1590392616

The lower rates go, the fewer buyers there will be. The maths may look better but in practice, there'll be less money about. Desire will go unsatisfied.
Low rates bring out the cautious banker in lenders - they look for only the best of collateral (job security, deposit ratio etc) and so borrowers.
Think about it. Would you prefer to lend more money at 11% or 1%? At 11% the odds are in favour of lower % rates to come - a win/win for borrower and lender. But at 1% the odds are reversed.
At 11% money is 'free' - there's more of it about than you can shake a stick at. Asset prices are charging ahead, and the cost of money is the least inhibitor. But at 1% credit is scarce.
But as we all know, time will tell.

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by  HeavyG  |  25th May 20, 7:48pm 1590392882

"At 11% money is free"... nonsensical.

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by  bw  |  25th May 20, 7:55pm 1590393310

The cost of money is compared to the risk taken and the expected return on lending.
Borrow it at 11% and whatever is bought goes up 11% - it's free!
That can happen at any nominal rate of course. But the second that 'whatever is bought' falls against borrowed money - it gets mighty expensive.
The lower rates go, the more the possibility of asset price falls. All asset prices contain the same embedded factor - the cost of money and so the expectation of future prices, and when that's low, the odds of price falls increase.
Why else do you think 'they' are shovelling liquidity out into the system by the trillion load? Because prices are likely to rise? It's the opposite otherwise 'unconventional' measures wouldn't be necessary.

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by  HeavyG  |  26th May 20, 9:01am 1590440501

"Borrow it at 11% and whatever is bought goes up 11% - it's free!"... more babble.

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by  maninavan  |  25th May 20, 8:20pm 1590394840

Practically, the lower rates go, if prices stay high, the more serious I take moving overseas. I'm feeling more and more like an idiot being young and living in NZ.

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by  bw  |  25th May 20, 8:37pm 1590395826

What we had 3 months ago isn't coming back - anywhere.
I chose to live in New Zealand, and if I had to make that choice again today? I would.
To finish on my above rant - if someone borrows money at 11% they expect the price of what they are financing rise to 12% to make it worthwhile ( make ~10%).
If they can borrow it at 1%, they only need prices to rise to 1.1% - if they can find someone to lend it to them at that price.
Take the 'money' out of that thinking, and what are we saying. The lower rates go, the lower prices are expected rise ( or have to to make money).

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by  Averageman  |  25th May 20, 8:35pm 1590395723

Kinda like a ponzi, a ponzi to protect debt based bank profit.

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by  Independent_Observer  |  25th May 20, 8:47pm 1590396450

There is almost a divide now, that could turn into a war, between the central banks and the 'have nots'.

Central banks are doing everything they can to keep asset prices high, out of reach of many. Central banks are meant to be support all of society, but in reality they are only supporting the 'haves'.

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by  Houseworks  |  25th May 20, 9:58pm 1590400720

Yes out of reach of some and that apart from when we built mud huts, has always been so. But others such as yourself choose not to participate on the basis the market is a ponzi, your words not mine. We cant go back to mud huts so that every family can be housed in their own home and be free from the landlord. However if you wish to live in a cave or mudhut I guess nobody can stop you.

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by  Independent_Observer  |  25th May 20, 10:20pm 1590402047

Have you ever read about the end of serfdom or the French Revolution?

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by  Houseworks  |  26th May 20, 6:39am 1590431945

Will you be leading the interest.co posters (ones who openly admit they are sitting on a personal portfolio of non-housing assets) raising pitchforks. To be clear, I did not say there will be no property value falls and no pain from the coronavirus. I told CJ099 just above that values wont fall as much as he wants. And earlier I have questioned the extreme and gleeful projections of carnage. Yes theres likely to be a select reset in commercial property such as retail shops, hotspo outlets and tourism assets. But that too shall pass. Not too sure about residential properties yet, the signs are that there will be support and demand

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by  Houseworks  |  25th May 20, 8:58pm 1590397113

"if someone borrows money at 11% they expect the price of what they are financing rise to 12% to make it worthwhile ( make ~10%).
If they can borrow it at 1%, they only need prices to rise to 1.1% - if they can find someone to lend it to them at that price.
Take the 'money' out of that thinking, and what are we saying. The lower rates go, the lower prices are expected rise ( or have to to make money)."

That I can follow cheers. I think that's a different line to the one that the number of buyers will contract due to lower interest rate.

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by  Houseworks  |  25th May 20, 8:51pm 1590396679

Ya think bw, fewer buyers, interesting theory. So therefore if mortgage interest rates fall to zero there could be no buyers at all. Zip zero nada. Yep that follows perfectly not. Now I understand, not

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by  MisterB  |  25th May 20, 10:53pm 1590404026

If interest rates fall to zero, it would be because virtually no one has jobs. So he may not be wrong. Depositors wouldnt deposit funds, offshore funding would be hard to access and come with heavy risk premiums, ergo, no bank would lend at zero, therefore no credit market and therefore no buyers.

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by  Houseworks  |  25th May 20, 10:59pm 1590404346

Homestly nothing surprises me now. Here we are sitting at 2.xx percent fixed for 5 years.

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by  Independent_Observer  |  25th May 20, 9:06pm 1590397562

Isn't the only reason we've been dropping rates is to avoid deflation? i.e. a terrible economic condition to have? As measured by CPI....

So interest rates drop because the economy is getting worse, then banks and real estate investors go yipee cheaper money, lets get more debt against the housing market.

One year later, economy weakens, no inflation, central banks drop rates further. Then banks and real estate investors go yipee cheaper money, lets get more debt against the housing market.

One year later, economy weakens, no inflation, central banks drop rates further. Then banks and real estate investors go yipee cheaper money, lets get more debt against the housing market.

One year later, economy weakens, no inflation, central banks drop rates further. Then banks and real estate investors go yipee cheaper money, lets get more debt against the housing market.

One year later, economy weakens, no inflation, central banks drop rates further. Then banks and real estate investors go yipee cheaper money, lets get more debt against the housing market.

One year later, economy weakens, no inflation, central banks drop rates further. Then banks and real estate investors go yipee cheaper money, lets get more debt against the housing market.

One year later, economy weakens, no inflation, central banks drop rates further. Then banks and real estate investors go yipee cheaper money, lets get more debt against the housing market.

One year later, we get COVID, deflation appears, central banks drop rates to zero. Significant number of people lose their jobs and wages get cut everywhere. Then banks and real estate investors go yipee cheaper money, lets get more debt against the housing market.

Then a significant number of people default on their debt.

The end.

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by  Independent_Observer  |  25th May 20, 9:09pm 1590397740

Moral of the story - the property sector think the economy is strong because house prices are rising. But it hasn't been, they've been benefiting from falling interest rates, which are only occurring because the central banks are struggling to keep the economy from falling into deflation. The point they think is best to take on the most debt is when interest rates are near zero, when in reality that could well be the worst time in history.

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by  Averageman  |  25th May 20, 9:25pm 1590398734

Exactly. An "Emperors new clothes" story. How many are about to be naked?

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by  Rob  |  26th May 20, 1:55am 1590414902

Probably because it is too big to crash?. If it did crash it would negatively affect so many people and institutions

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by  Jarlaith  |  26th May 20, 7:06am 1590433581

They don’t need to deflate just stagnate to allow wages to catch up. That would be least painful way to make housing affordable.

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by  al123  |  26th May 20, 9:52am 1590443573

Least painful for whom? There would still be a whole cohort pretty much locked out, given how long it will take for wages to catch up. Housing isn't affordable now, it hasn't been affordable for ~10 years, and if it stays unaffordable for another ~10 years to allow wages to catch up there will be a whole group of people who haven't been able to what we used to consider ordinary - buy a house to have a stable place to raise a family and to ensure you've got a solid base for retirement.

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by  Houseworks  |  26th May 20, 1:10pm 1590455457

Total rubbish. You say not affordable, how did thousands of fhb over 10 years afford a home then. With your angle it's no wonder you're still looking and will be for a long time.

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by  al123  |  26th May 20, 1:18pm 1590455885

I don't think you understand what 'affordable' means. To say houses are unaffordable to a certain cohort doesn't mean that no-one in that cohort has been able to buy a house.

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by  Houseworks  |  26th May 20, 1:25pm 1590456336

Word play. Making statements like the one you did does nothing for your credibility

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by  al123  |  26th May 20, 1:52pm 1590457975

Perhaps you haven't been reading this site for very long? Interest.co.nz runs a series on affordability: they define affordable as the following: "Mortgage payments are considered affordable when they take up no more than 40% of take home pay." There is of course a lot of debate about exactly what 'affordable' means: for example, 40% is pretty high (many measures use 30%, like the experimental Stats NZ measure: more info here: https://www.hud.govt.nz/news-and-resources/statistics-and-research/hous…). Measures as a percentage of take home pay don't take into account saving for a deposit, though. Some measures (i.e. the demographia survey) use median multiples instead (around 3 is generally considered to be affordable).

You can see how these are more useful though than just saying 'some people have bought houses recently, therefore houses are affordable.' For example a significant number of first home buyers (I've seen estimates from 50-90%) rely on help from family to buy a house. It would seem odd to say that houses are affordable for first home buyers if by affordable we mean 'can buy a house if someone else gives them the money.'

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by  THE MAN 2  |  26th May 20, 2:07pm 1590458853

Houses in NZ are very affordable in most places in NZ!
It has never been a given that you will own a home in NZ, or why did they build so many crappy state homes in the 60’s?
Because not everyone Ever has owned a home, so why is it to be any different now????
When interest rates are so low that it is less to own than rent, you are delusional if you think houses are not affordable for most.
You are correct they won’t be affordable for those that rely on welfare handouts, so if that is you then go and do something about it!
While the doom and gloomers continually go on, I would suggest getting your skates on and go and buy one, if you have a deposit saved!
If you haven’t got one saved, if you get along well with your parents, go,and have a word to them and see if they can assist you, if they have equity sitting idle!!
Great time to be buying!!

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by  Chairman Moa  |  26th May 20, 3:36pm 1590464202

The Man 2, your commentary is more and more pointing to the fact that you are an active RE agent. If you say you are a successful landlord, would it be better for people NOT to buy and continue renting to benefit your renting business?

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by  timbob  |  26th May 20, 11:22am 1590448951

Of course, in 3 years time, taxation of income is likely to be higher to pay off all this covid-19 induced debt, leaving wage earners with less in the pocket to spend, and businesses productivity and revenue return to pre-covid levels, or continue to lift indefinately.

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by  Andrewj  |  25th May 20, 7:39pm 1590392375

Better start reading up on Japan

https://www.thebalance.com/japan-s-lost-decade-brief-history-and-lesson…

Negative interest rates in Japan for two decades failed to inflate housing market
https://stevesaretsky.com/negative-interest-rates-war-on-housing/

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by  Lapun  |  25th May 20, 10:40pm 1590403242

The four key lessons:
1. Act quickly to stem the crisis.
2. Spending isn't the answer. Japan's attempts to spend on public works projects weren't particularly successful in helping it recover more quickly from its economic woes.
3. Counteract demographics. Japan's reluctance to substantially raise its retirement age or taxes only helped to further its demographic problems.
4. Don't rack up debt. Japan's massive levels of debt were ultimately responsible for its crisis and the lost decade, and the BOJ was behind the curve in raising interest rates.
For NZ I worry about (2) and (4).

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by  CN  |  26th May 20, 3:48pm 1590464887

"Negative interest rates in Japan for two decades failed to inflate housing market"

Residential real estate in Japan circa 1991 - then house prices fell by over 45% (and still have recovered to their previous peak almost 30 years later. They are still at least 30% below their peak almost 30 years ago) -

https://fred.stlouisfed.org/series/QJPN628BIS

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by  Averageman  |  25th May 20, 9:26pm 1590398775

Must protect global debt enslavement operating model, must avoid reality check reset. Iceland has been the only place call the banks bluff, well done them.

At what rate is the music over?

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by  Chessmaster  |  25th May 20, 9:53pm 1590400395

2.6%, 2.6%, 2.6% going once. Do i have 2.55 in the room.... surely bidding cant stop there. Let's get them all in a room and get an auctioneer to get them to the bottom.

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by  Boatman  |  26th May 20, 8:19am 1590437977

DO NOT FIX ANYTHING ..................its going lower , like much much lower .

Here are my predictions

Deposit rates will be close to zero in about 20 to 28 weeks

I would predict we will get a mortgage rate starting with 1, something ...... not long from now

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by  Chairman Moa  |  26th May 20, 11:04am 1590447854

If you compare this lowering of interest rates to the event of the Titanic. This is when they spotted the giant iceberg at 120m ahead, it will take 300m for the ship to do a complete 90-degree turn. And house buyers will be Jack and Rose still sushing out each other at this moment.
We all know the rest of the story..

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by  blobbles  |  26th May 20, 11:37am 1590449858

Oh piffle, look at that ice berg, it's tiny! Let's order some jolly nice hot tea to have on the deckchairs and watch as our unsinkable ship pushes that wee annoyance out of the way!

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by  CN  |  26th May 20, 3:49pm 1590464978

Meanwhile a non bank lender is easing LVR for investors:

https://www.landlords.co.nz/article/976516887/resimac-eases-criteria-fo…

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