Strings attached to low HSBC mortgage rates

Strings attached to low HSBC mortgage rates

HSBC is offering what it says is the lowest mortgage rate in New Zealand in over 50 years.

It is promoting a rate of 3.95 percent for 18 months for its "premier" customers.

That is lower than the 3.99 percent offer that SBS Bank put into the market for a limited time late last year.

But there are strings attached. Customers must have a 20 percent deposit and have their salary paid into an HSBC account.

Customers must have a minimum of $500,000 in home loans with HSBC and/or savings and investments of $100,000.

HSBC has also cut its other fixed rates by as much as 40 basis points.

It is offering a special rate of 4.25 percent for one year. Other banks are offering rates of 4.39 percent.

But advisors say the banks are prepared to offer deals if you want to negotiate.

TSB has an offer of 4.29 percent for two years, with other banks offering rates around 4.49 percent.

Floating rates have fallen as low as 5.6 percent.

Although people tend to focus on the official cash rate (OCR) there are other factors that determine mortgage and savings rates in New Zealand.

The cost to the banks to borrow from each other and from offshore is a major influence.

Recent days have seen some easing of wholesale rates on global market. The Federal Reserve in the United States will be closely watched. It had planned to raise hikes several times this year. But the turbulence on global markets has raised questions about the potential pace of the increases.

Economists at both Westpac and ASB are predicting further cuts to the OCR. That is because inflation is at a two-decade low and is well below the Reserve Bank's target band of 1-3 percent.

The flip side of lower mortgage rates is a corresponding fall in term deposit and savings rates.

Some one-year rates are below 2 percent, while larger sums are paying around 3.5 percent, or 3.75 percent.