There's more to a home loan than the rate

HSBC has launched a special 3.95% mortgage rate for premium customers in New Zealand — but experts have warned consumers to look out for “fish hooks” in the deal.

HSBC set out its market leading rate on 2-year fixed-term home loans last week. The 3.95% offer is available for Kiwis who qualify for an HSBC Premier Account. Customers need to have $100,000 in savings or investments, or $500,000 in home loans to qualify for HSBC Premier.

The sub-4% rate stands as the lowest headline rate in New Zealand. It is 44bps lower than the next cheapest 2-year loan, the TSB Special at 4.39%. The HSBC rate is 3.3% cheaper than Heartland’s 2 year rate. HSBC is set to kick off a marketing campaign behind the offer in the coming months.

Despite the attractive headline figure, mortgage experts have called on customers to consider other factors when they weigh up the deal. Advisers say the offer does not have a strong cashback component, and only covers lawyers’ costs. HSBC’s offer is also limited to owner-occupied properties and is only available direct.

Geoff Wilton, the founder of Pukekohe-based broker Counties Home Loans, said limited cashback in HSBC’s deal meant rival offers could turn out to be even cheaper. Wilton said the high cashback rates currently offer from ANZ and BNZ meant they could be more favourable. “Factor in any cash back and actually look for the fish hooks to see whether it is good a deal as it looks on the surface.”

Jenny Campbell, CEO of The Mortgage Supply Company, said it would “pay to note” potential fish hooks in the deal. She added: “This offer is pitched at 'high value/premium' customers, with a large loan balance.  Also, this product is really a 'set and forget' product, and isn't overly useful for clients who require a 'service' element to the loan.”