HSBC second to offer sub2% mortgage rate

AUCKLAND: The mortgage rate wars have moved up a notch with another bank offering a sub2% rate.

HSBC has launched a 1.99% rate for both 12 and 18month fixed terms, matching Heartland Bank’s rate.

On top of that, HSBC has loosened its criteria to include households earning more than $125,000.

Previously, those who wanted HSBC’s special rates had to qualify as a premier customer by borrowing a minimum of $500,000 or having a balance of at least $100,000 in the bank.

HSBC head of wealth and personal banking Martine Milicich said it had expanded its eligibility criteria so that significantly more people would be able to take advantage of the opportunity.

Eligible borrowers now only have to meet one of the three criteria.

The rate is being offered to new customers and existing premier customers who borrow an additional $100,000.

Ms Milicich said HSBC had changed its premier offering globally over the past year after it found people took out a $500,000 loan but then paid it down and failed to meet the criteria.

‘‘We put in an income criteria which means those customers who meet that criteria or have those deposits or home loan will actually meet our criteria and therefore we will be able to support these premier customers throughout their lifespan.

‘‘It makes a lot more sense from that perspective.’’

Heartland launched the first sub2% mortgage rate in New Zealand last October with a 1.99% rate for one year.

To be eligible, customers must be refinancing or buying a standalone house on a single section, have a deposit or equity of at least 20% and intend to live in the home.

So far the major banks — ANZ, ASB, BNZ, Westpac and Kiwibank — have not followed suit, although they have dropped their oneyear rates to 2.29% with a range of different conditions.

Ms Milicich said HSBC hoped the criteria change would help boost its mortgage book, which was worth about $2.2 billion or just under 1% of the market.

‘‘I think it will help us to grow our mortgage book, but it will be for one section of customers. The reality is the dominant criteria for our mortgages will still be the half a million cutoff.’’

In Auckland there were many customers who would meet that criteria, but the change was designed to capture those who had a good income but might only want to borrow $200,000.

‘‘They are the ones that we really want to keep.’’

HSBC’s drive for more customers came a day after the Reserve Bank announced it was tightening the amount banks could lend to lowdeposit borrowers in a bid to cool the hot housing market.

From March 1, banks will only be able to do up to 20% of new lending to owneroccupiers with a deposit under 20% and up to 5% to investors with a deposit under 30%.

Then on, May 1, it wiil get harder again for investors as banks will only be allowed to lend up to 5% to those with a deposit of less than 40%.

The Reserve Bank has said it expected the banks to respect the changes immediately.

ANZ moved to a 40% deposit requirement for investors before Christmas, while ASB, BNZ and Kiwibank introduced the requirement for investors last week. — The New Zealand Herald