HSBC cuts its 3 year fixed rate by a whopping 1.3%

[Nth Brisbanite]

Noticed this article on news.com.au.

Is it a sign of good things to come?


HSBC Bank Australia has cut its fixed home loan mortgage rates by between 35 and 130 basis points.

The one-, two- and three-year fixed rate for existing customers was cut to 8.99 per cent. HSBC also dropped its four- and five-year fixed rate to 8.90 per cent.

The biggest reduction was to the bank's three-year fixed rate for new customers, which has fallen to 7.99 per cent, from 9.29 per cent previously.

HSBC Australia head of home loans John Lane said the reductions would provide welcome relief from recent increases in variable interest rates.

"Recent weeks have seen a significant reduction in the medium and long-term cost of fixed-rate funds in the commercial market,'' Mr Lane said today.

 

[Bradsdad]

They're all dropping 'em at present. Guessing not many takers at present but the 7.99% aint all that shabby.

 

[Rangi]

Sign of things to come, would be a good way to get a discount from the get go, but would you end up better off??? Good way for HSBC to get a slice of the pie, but personally, I wouldn't go near a fixed loan at present.

 

[Boyler_Room]

Dropping fixed rates suggests they're planning for the RBA to cut rates in September. Fixed rates are always the first to move in anticipation, although they usually slip under the radar of Joe Public. Brokers obviously have the advantage in that area, getting regular updates from their lender panel.

As Bradsdad said, they're all cutting fixed rates at the moment, but I reckon that HSBC 3 yr rate is pretty darn good at the moment if you're in the market for a fixed rate.

 

[Peter_Tersteeg]

I'd say that it's a good bet for 1 or 2 years. It's way to early to say where we'll be in 3 years though. I think if you fixed anything at 4 or 5 years at this point you'll regret it.

 

[PrimeCommercial]

My opinion is that the boffins that work for the banks have a much better idea as to where interest rates are headed then you and I. If they're all dropping the fixed rates you can bet London to a brick on that IR will fall more than what they're offering. I've always been of the opinion that fixed rates will generally work out more expensive the a good variable rate. Your just paying extra for the SANF.

 

[fatboy4]

Totally agree- I read somewhere you lose 85% of the time when you fix. (Most of that winning 15% is probably forumites)

I remember fixing at 8.5% for three years- they ended up going to 6 something!

You live and learn.

 

[Peter_Tersteeg]

Fixing is a risk mitigation strategy and is not the best strategy to save money as it's been pointed out that you usually loose on a fixed rate. If you can't cope with another rate rise or three, then you should fix.

Having said that, the long term average rate is around 8%. When rates get below 7% and the economy is spinning up, it's fairly easy to guess where the rates will be going. When the banks are selling rates above 9% and the newspapers are fully of doom & gloom, it's probably not the best time to fix.

 

[Nth Brisbanite]

I can't see how you can lose at 7.99% for 3 years. I agree that it may be a loss leader in order for HSBC to increase its market share.

I'd be happy to be paying that rate for the next 3 years and doubt whether I'd fit into the 80% who usually lose when fixing their rate.

As HSBC do not deal with brokers anymore, it is hard to get unbiased information about the product. Has anyone got any knowledge about the 3 year deal?

 

[ianvestor]

I think if you fixed anything at 4 or 5 years at this point you'll regret it.

Yeap, unless you don't care how much it costs to have payment consistency.

 

[GoAnna!]

People seem to often overlook that fixed loans can be broken. And if timed correctly no penalties apply.

 

[jingo]

People seem to often overlook that fixed loans can be broken. And if timed correctly no penalties apply.

Yep, this is exactly right! Great strategy too! Just have to leap onto the variable at the right time.

Now is the time to watch carefully and be prepared to ride the rates down!

 

[nonrecourse]

The bank follows the golden rule they have the gold

When banks fix rates the statistics are that 19 out of 20 fixed loans they win. I currently have a fixed loan at 6.69% until October 2011 I'd like to say it was good foresight but I have had at least a dozen fixed loans over the last 14 years and this is the first one (so far) we have won.

 

[Rolf Latham]

Hiya NR

But the bank gets its spread regardless..............and thua cant lose......

If you are on variable the lender will get spread x

If you are on fixed, they have onsold the risk and are guaranteed spread x anyways

ta
rolf

 

[tess85]

As HSBC do not deal with brokers anymore, it is hard to get unbiased information about the product. Has anyone got any knowledge about the 3 year deal?

I think the 3 year deal is over. But I'd be interested to hear some opinions about HSBC in general. I know that brokers don't deal with them so it's hard to get opinions.

I went to a HSBC 1st home buyer night and they seemed quite good. Their comparison rate is OK compared to most other banks (especially the powervantage loan, although there is an account keeping fee of $20 dollars a month on it)...

 

[tess85]

I have read all the loan info on HSBC's website for their miscellaneous loans. It's interesting, they don't ever mention having an 100% offset account. I can't find whether HSBC do or don't have this. They mention redraw, but not offset...

The only thing I don't like about HSBC is that you can't get a loan via your broker... which takes away a helping hand when it comes to applying for the loan!

 

[Rolf Latham]

Hiya

In the old days we used to do a bot of HSBC business.

Found they had ok priced products, good serviceability model, but were slow to do deals, and werent always good with clients

ta
rolf

 

[tess85]

hmm. they were certainly nice to us at that first home buyers seminar... free food, free drinks, etc. As this is for our 1st home, I'm probably not game to go to HSBC by myself... thank goodness for brokers.

 

[Nth Brisbanite]

Bit surprised that HSBC don't offer it any more. Westpac do a 8.19% for 3 years and this can be reduced to 7.99% if you have a pro pack with them. Still tossing up whether to go that way, especially as interest rates seem to be coming down.

 

[Rolf Latham]

Hiya Nth

That WBC rate is avail on lo doc as well, which makes its attractive for some.

the reason I feel HSBC isnt doing the low rate fixed money is because they had a limited batch of dough that they found somewhere, now its been lent, and the same source isnt available any more

ta
rolf