HSBC is ending its offers of fixed-rate home loans at 1.99%, taking them to 2.25% after a two-month period at an unusually low level. All eyes are on RBNZ reaction to international benchmark rate hike
There has been very little change in mortgage rates over the past two months.
But on Tuesday, in what could be a sign of the times, HSBC changed some key rates – and raised them.
HSBC has increased the fixed 12 and 18 month rates by 26 basis points to 2.25% for each of these terms.
These are still low rates, lower than those of all the major banks. But the advantage has diminished.
And, going up more than 2% means that only Heartland Bank now offers a fixed mortgage rate below 2%.
All eyes are on international benchmark yields, particularly the 10-year US Treasury, and those yields have increased. In fact, since HSBC’s rate cut on February 10, 2021, that benchmark has risen by more than 50 basis points.
But long-term wholesale rates do not directly affect the costs of financing 12- and 18-month mortgage rates. These are more influenced by yields on New Zealand government bonds with maturities of three years or less. And this is the part of the wholesale market that the Reserve Bank is targeting with its Large Scale Asset Purchase Bond Purchase Program, aimed at keeping rates low – which is happening.
One-year wholesale swap rates only increased 6 basis points during this two-month period. The two-year only rose 7 basis points (although it increased from about a week ago). And the three-year is up 17 basis points. Thus, the Reserve Bank succeeds in keeping basic interest rates restricted in the part of the market that affects mortgage lending.
And with major steps being taken by the government (interest deductibility for investors) and the Reserve Bank (loan-to-value ratio restrictions), both are likely to want to see how these changes play to curb rampant house prices. . increases before relaxing on the interest rate front.
HSBC Premier eligibility for new customers is for those who borrow $ 500,000 or more, or existing customers who borrow an additional $ 100,000 or more. There are other criteria, including minimum deposit and equity criteria.
The recent surge in demand for housing and home loans means that banks are under no pressure to cut rates when borrowers line up to borrow. Banks are no longer in a rationing position, ensuring they get the best quality from new customers. If borrowers get the idea that rates might go up, that might change.
A useful way to understand these new lower mortgage rates is to use our full function mortgage calculators. Term deposit rates can be valued using this calculator.
And if you already have a fixed-term mortgage that is not currently up for renewal, our break cost calculator can help you assess your options.
Here is an updated snapshot of the lowest fixed-term mortgage rates offered by major retail banks today.
In addition to the table above, the BNZ has a single seven-year fixed rate of 5.20%.