NZ: HSBC - an attractive and unique competitor for home loans

HSBC is reclaiming the low rate position for all mortgage rates for fixed terms of 1 year and longer in New Zealand, with introductory rates for one year and 18 months fixed at 3.99%.

This is currently the lowest rate offer in the home loan market. HSBC has continued to reduce its fixed introductory rates, lowering its three years fixed rate by 20bps (now 4.69%), its four years fixed rate by 20bps (now 4.99%), and its five years fixed by 30bps (now 5.29%).

Given HSBC is a small contender in the home loan market, particularly when compared to the majors (ANZ, ASB, BNZ, and Westpac), it is unlikely HSBC will see a surge in their market share. However, while HSBC’s market share is small in NZ, their mortgage book has grown in recent times because of their uniquely low-interest rates.

HSBC’s low introductory rates will no doubt cause an interest among borrowers looking for a way to save on their mortgage, potentially causing borrowers to switch from their lender.

According to RFi Group data, 8% of borrowers would consider switching their mortgage if they saw a rate difference of less than 0.25 percentage points at another institution.

While 17% would consider switching lenders if they saw a rate difference of 0.25-0.49 percentage points elsewhere, which HSBC’s five-year fixed rate falls in between.

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