With rates continuing to drop since the OCR cut, and most banks now only matching one another, HSBC has come out with the lowest fixed rate across all terms.
Their new Special Home Loan rates are, 3.35% for one year, 18 months, two, three, four and five years fixed.
In addition to the cut, the wholesale swap rate also dropped to an all-time low, which will make things interesting as we enter the banks' spring campaign season.
This drop in the wholesale swap rate and timing of the HSBC rate cut does go hand in hand. HSBC, unlike all the other banks in New Zealand, funds their lending portfolio from the wholesale market. The other banks, however, are required to use customer deposits as their primary funding source. The constant need to balance out lending and deposit interest rates will make it hard for other banks to match HSBC's new special. However, could we start seeing an increase in cash contributions and gifts as other measures for banks to attract new borrowers?
We think this is truly a buyers' market, where the negotiating power is sitting with the borrowers.