HSBC sets another record low mortgage rate

by Ksenia Stepanova23 Nov 2018

HSBC has again reduced its special one year fixed mortgage rate by -6 basis points, setting it at 3.79% - the lowest on record across all New Zealand banks so far.

The offer applies to an HSBC Premier fixed rate home loan, which starts at one year and ends at 5.29% for a five year fixed rate. The move reflects a continuing low interest rate environment, with the majority of New Zealand’s largest banks dropping their interest rates over the last several months.

The next lowest one year fixed rate on the market is 3.95%, which is currently offered by ANZ, ASB, Westpac and TSB.

The conditions of an HSBC Premier loan include a minimum $500,000 home loan value, and a minimum of $100,000 in savings and investments with HSBC in New Zealand. Overseas Premier customers also qualify for Premier status in New Zealand.

According to ASB economist Kim Mundy, floating and short-term mortgage interest rates are expected to remain at current low levels well into 2019.

“Fixed mortgage rates have dipped across the majority of terms since our last Home Loan Report,” Mundy stated. “Mortgage rates are influenced by a number of factors, but spring home loan campaigns and a period of lower funding costs were the key drivers of the recent shift lower.

“Outside of these movements, the main themes remain largely intact. We continue to expect the RBNZ to leave the Official Cash Rate (OCR) on hold for a considerable period of time.”

Mundy also expects longer-term mortgage rates to slowly rise given gradual increases to the OCR, and the risk of mortgage rates rising faster than expected still remains a concern for homeowners. She also warned homebuyers against going for the cheapest carded rate, as it is more prone to volatility and may quickly change.

“Overall, it is important for borrowers to weigh up their own priorities and make the mortgage choice that looks best aligned with their needs,” she stated.

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