HSBC is the next to announce lower mortgage rates.
Their one year fixed becomes 2.80%, a fall of -15 bps, matching China Construction Bank and almost matching the market-leading 2.79% rate from the Bank of China.
Their new eighteen month rate becomes 2.85% which is a reduction of -10 bps and becomes the market-leading rate for this term.
And their new two year rate becomes 2.89%, a fall of -20 bps but not quite matching China Construction Bank's 2.85% rate for this term.
They also cut their six month fixed rate by -15 bps to 3.49%.
All these rates are for their Premier offer which comes with minimum conditions.
This is an early announcement; none of these rates will be available until Thursday, May 21. (Update: In an earlier version, our headline reported the wrong effective date.)
Here is the full snapshot of the advertised lowest fixed-term 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 announced at May 14, 2020 | % | % | % | % | % | % | % |
| ANZ | 3.65 | 2.99 | 3.20 | 3.25 | 3.99 | 4.75 | 4.85 |
 |
3.89 | 3.05 | 3.25 | 2.99 | 3.69 | 3.79 | 3.89 |
 |
4.79 | 3.09 | 3.05 | 3.35 | 3.69 | 3.79 | 3.89 |
 |
4.29 | 2.99 | 3.39 | 3.65 | 3.99 | 4.09 | |
 |
4.79 | 3.05 | 4.25 | 2.99 | 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 | 3.49
 |
2.80
|
2.85
|
2.89
|
3.50 | 3.60 | 3.70 |
| ICBC | 4.29 | 3.18 | 3.18 | 3.18 | 3.20 | 3.99 | 3.99 |
 |
3.89 | 3.09 | 3.39 | 3.39 | 3.69 | 3.79 | 3.89 |
 |
3.89 | 2.89 | 3.35 | 3.35 | 3.69 | 3.79 | 3.89 |
In addition to the above table, BNZ has a unique fixed seven year rate of 5.20%.
Fixed mortgage rates
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19 Comments
I feel bw couldn't be more wrong. In many cases people will be coming off 3.99 and onto less than 3. Landlord's profits are often very thin and this helps a lot. Suddenly a property goes from breaking even to making a modest income. Or for home owners a few thousand more to spend.
I'd be worried about the operating efficiency of a bank that takes a whole week to enact a fixed rate change. Let's be honest though, HSBC is very much a niche player - no branches, poor CX, harder criteria and yet their rates only minimal difference to full service bank. They must be under pain.
HSBC did pretty well globally out of the GFC compared to many banks. But Europe's biggest bank has definitely been having a less favourable time in the last few years. However, I don't think HSBC's marginal presence in NZ has ever been an indication of pain. I banked with HSBC for many years and their presence in NZ was explained to me by them to be about maintaining services for their existing high net wealth customers or picking up new high net wealth individuals in NZ, who might also then be interested in other global services. They want to capture wealthy NZ-ers who might then bank with them across the globe. I didn't get the impression they were interested in the tiny domestic NZ market but that they want the prestige of being able to claim that they are a global bank who offer services across the globe for their "global customers". That's their brand.
Still extremely expensive rates taking into account the current OCR compared to prior levels. Banks still didn't match the past OCR cuts and in a crisis like this taking advantage or it to increase their margins is unethical at least, more supervision is required if we want the RBNZ intentions to push economy to have the effect they are intended to have.
It might be more margin preservation than margin increasing. It's worth remembering that NZ banks are still heavily reliant on retail deposits so that's just as relevant to their funding costs as the OCR. The minimum rate at which retail depositors are willing to accept becomes the floor. For example if the retail deposit floor was 2% and a banks margin was 1% then to preserve their margin they need to keep loans at 3%. In this case if the OCR dropped say 50bps and the bank kept it's loans at 3%, it hasn't increased it's margin by 50bps, it's still only 1%. Now that's a very simplistic view as it ignores bank funding sources heavily linked to the OCR such as the new Term Lending Facility and ignores things such as the free funds of transactional balances etc. but it serves it's purpose in showing how a less than full pass though of OCR cuts is not necessarily banks increasing their margins.
Banks do not lend the money that depositors give them, this is not how the banking system works, they create debt up to a multiple of their deposits, so there's no real correlation between deposit interests and mortgages, as much as they would like everyone to think there is.
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