HSBC has cut its market leading advertised mortgage rates lower.
It has announced on its website 'special' new carded rates for both one year fixed, and eighteen months fixed.
The new rate is the same for both terms and is 3.85%, a -14 basis points drop from the 3.99% rate that applied before, and which were already the lowest advertised rates in the market.
These rates apply to HSBC's Premier offer.
In June 2018, HSBC had its fixed 18 month rate at 3.85% for eight weeks before raising it to 3.99%. The 3.85% rate level is an all-time low for a bank, and at least a 50 year low.
To qualify as a Premier customer, new clients need to have a "combined home loan" of $500,000, or they need to have $100,000 in savings and investments at HSBC.
Existing customers qualify if they borrow at least an additional $100,000.
Minimum deposit and equity criteria also apply to both groups.
Meanwhile, there is a lot of activity in international wholesale benchmark interest rates. US benchmarks are rising, but so far those changes are not flowing through significantly to New Zealand wholesale rates.
From mid-June to mid-August, New Zealand two year swap rates fell -20 bps. This gave the room for the Spring real estate selling season reductions. Since mid-August, those same wholesale swap rates have move very little. And despite the big shifts that continued overnight, local swap rate markets have opened here virtually unchanged this morning.
With wholesale swap rates not moving much recently, the retail rate tightening of carded rates is more 'competitive' than cost driven.
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 October 5, 2018 | % | % | % | % | % | % | % |
 |
4.99 | 4.15 | 4.85 | 4.35 | 4.49 | 5.55 | 5.69 |
 |
4.95 | 4.19 | 4.15
|
4.29
|
4.39 | 4.95 | 5.09 |
 |
5.25 | 4.19 | 5.05 | 4.35 | 4.49 | 5.59 | 5.59 |
 |
4.99 | 4.19 | 4.19 | 4.49 | 4.99 | 5.09 | |
 |
4.99 | 4.19 | 4.79 | 4.35 | 4.49 | 5.29 | 4.99 |
 |
4.50 | 4.19 | 4.35 | 4.39 | 4.49 | 4.99 | 5.15 |
 |
4.85 | 3.85
|
3.85
|
4.19 | 4.69 | 4.99 | 5.29 |
 |
4.99 | 4.19 | 4.49 | 4.19 | 4.49 | 4.89 | 4.89 |
 |
4.85 | 4.19 | 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%.
23 Comments
Hi Cowpat.
Shall we look at some other numbers from when the US dollar NZ dollar exchange rate was last at these levels and consider again if these lower rates may be an attempt to reduce the impending inflation pressure on existing borrowers close to the margin - (while they still can before the RBNZ has to move rates up)
March 2016 - FED rate 0.36%
RBNZ rate 2.25% (March 2016 cut)
Exchange rate 0.66-0.68 currency band(and strengthening)
Oil Price US $30-$35 dollars per barrel
Full pump price AKL. (feb 2016) $1.73
October 2018 - Fed rate 2.26%
RBNZ rate 1.75%
Exchange rate 0.65-0.67 band (and weakening)
Oil Price US$75-$80
Full Pump price AKL - $2.49
You couldn't have asked for better conditions in NZ in 2016.. Low oil, reducing interest rates with an appreciating NZ dollar (trend the other way at present).
Also HSBC are masters in this environment and will hoover up all the borrowers that have large equity protection and plenty of income.
These low rates are also about attracting reducing numbers of new borrowers as well, to prop up the market against which the existing loans have been made.
Nic.
Yvil
ANZ now predicting US 62 Cents to the NZ $ before the end of the year... Inflation pressures are building and the new data hitting desks at the RBNZ will be difficult to 'look through' forever.
https://www.stuff.co.nz/business/money/107637408/new-zealand-dollar-hea…
Really don't know what all the fuse is about. HSBC are offering FTB's 1.98% for their UK mortgage.
Take a look: https://www.moneysupermarket.com/mortgages/results/#?goal=1&property=17…
I dont know why people continue to compare different countries mortgage rates.. its irrelevant. To lend money in NZ, you have to obtain the majority of that money from NZ depositors, who in turn demand a certain return. So in the case of nz, our OCR is 1.75% but banks have to offer up to 3.5% (or more at times) to obtain the funds to then lend out. In the UK.. they dont need to pay savers as much, so borrowing costs are much lower. Are we going in that direction.. probably, as the banks struggle to find the lending they will continue to be more and more competitive.. But will be get down to the UK level, probably not. We have a shortage of savers, and regulations that require the banks to be funded by them, so it is nearly impossible structurally
Banks in the UK have an average NIM of about 1.65% (2016 - https://fred.stlouisfed.org/series/DDEI01GBA156NWDB), so if 1.98% was indicative of their avg mortgage interest rate then it would imply an avg cost of funds 0.33%. The weighted avg mortgage rate in the UK is actually closer to 3%. Banks in the UK do not need to raise as much money from retail depositors (they have a much larger savings base) and so the pressure to offer larger deposit premiums over wholesale rates does not exist to the same degree
Perhaps scrutinize the quoted source diligently, rather than waste words on disingenuous half -truths. The sub 2% rates are start up rates that revert after 1 or 2 years to variable rates in the 4%-5% range. It is a hook-in price, taking a hit on margin in the first two years followed by a fat margin for the next 23 years.CJ099 has just used a erroneous example.
I guess they had plenty of "Deposit Money" to play with.
https://www.marketwatch.com/story/netflix-documentary-re-examines-hsbcs…
As I commented in your June 2018 story, this isn't a 50 year low.
https://www.interest.co.nz/news/83133/hsbc-nz-launches-its-lowest-ever-…
3.79% in 2016 (twice I think, in that year).
We welcome your comments below. If you are not already registered, please register to 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.