HSBC claims 3.95 per cent mortgage rate is lowest in over 50 years

To join HSBC Premier, customers need a half-million dollar mortgage or savings of at least $100,000.
PETER NICHOLLS/REUTERS

To join HSBC Premier, customers need a half-million dollar mortgage or savings of at least $100,000.

HSBC says its record low 3.95 per cent home loan rate is not a marketing stunt, and will make money for the bank.

On Wednesday the global banking giant launched what it claims is the lowest mortgage rate in New Zealand for over 50 years.

The new rate applies to the bank's fixed 18-month loan.

Head of retail banking Glen Tonks said it would only be available for a limited time.

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"It's very competitive - an exceptional rate - but it is profitable. It's not a loss-leader for us."

Like all home loan 'specials', the rate comes with several strings attached.

Customers will need at least 20 per cent equity, and to have their salary credited to an HSBC account.

It is also only available to HSBC Premier customers, requiring a mortgage of at least $500,000 or minimum savings and investments of $100,000.

However, Tonks said membership was relatively accessible, particularly for Aucklanders with large loans.

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"I would encourage people to have a look at it, have a chat to us."

HSBC's headline-grabbing mortgage promotions were aimed at winning market share, Tonks said.

"We've been really pleased with growth, and the types of customers we've brought on board."

The bank has also cut its six-month, two-year, three-year and four-year mortgage rates by up to 40 basis points.

It now holds market-leading positions across five interest rate categories.

Other major banks would not disclose whether they had any rate cuts planned.

SBS Bank launched the first sub-4 per cent mortgage rate in November last year, with a 3.99 per cent one year loan.

Chief executive Wayne Evans, who died last month, said at the time that the rate was profitable and not a marketing stunt.

Mortgage rates are closely linked to swap rates between lenders, which have fallen 20-40 basis points since December.

They are also influenced by the Reserve Bank's official cash rate (OCR), which remains at a record low of 2.5 per cent.

Some economists expect further cuts to come this year, with both inflation expectations and the consumer price index at a historic low.

HOTTEST BANK MORTGAGE RATES

Floating: 5.6 per cent - ICBC

Six month: 4.69 per cent - ICBC
Six month "special": 4.85 per cent - ASB, HSBC Premier

One year: 4.39 per cent - The Co-operative Bank
One year "special": 4.25 per cent - HSBC Premier

Eighteen month: 4.39 per cent - The Co-operative Bank
Eighteen month "special": 3.95 per cent - HSBC Premier

Two year: 4.49 per cent - The Co-operative Bank
Two year "special": 4.29 per cent- TSB

Three year: 4.75 per cent - The Co-operative Bank
Three year "special": 4.49 per cent- BNZ

Four year: 4.89 per cent - The Co-operative Bank
Four year "special": 4.79 per cent - HSBC Premier

Five year: 5.15 per cent - The Co-operative Bank
Five year "special": 4.99 per cent - HSBC Premier

Source: Good Returns

 - Stuff

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