HSBC sweetens the deal for fixed rate borrowers ahead of cash rate call

HSBC has reduced some of its home loan rates on the eve of the Reserve Bank cash rate announcement. It now joins one other lender in offering the lowest two-year fixed home loan on our database.
HSBC home loan cuts, 1 June 2020
HSBC has reduced some home loan interest rates. Have you compared? Image source: Willy Barton, Shutterstock.

HSBC’s rate cuts today see the lender’s two-year fixed rate fall into line with ING, both of which now offer the lowest rate of 2.09% on Canstar’s home loan database (comparison rates 2.98% and 3.77% respectively).

HSBC’s two-year fixed rate offer is available to apply for from today, 1 June, but applications have to be submitted by 31 July and loans settled by 30 September.

HSBC has cut two and three-year fixed rates by between 0.06 and 0.16 percentage points for owner-occupiers paying principal and interest (P&I), as well as a variable interest rate. The changes for owner-occupier borrowers paying P&I are as follows:

  • Two-year fixed home loan: reduced by 0.16 percentage points to 2.09% (comparison rate 2.98%)
  • Two-year fixed Premier home loan: reduced by 0.16 percentage points to 2.09% (comparison rate 3.10%)
  • Three-year fixed home loan: reduced by 0.06 percentage points to 2.29% (comparison rate 2.95%)
  • Three-year fixed Premier home loan: reduced by 0.06 percentage points to 2.19% (comparison rate 3.07%)
  • Premier Standard Variable Rate home loan: reduced by 0.05 percentage points to 2.75% (comparison rate 3.21%)

Canstar finance expert Steve Mickenbecker said fixed rates had become the competitive instrument of choice among Australian lenders, as they jostle for their share of quality borrowers.

In May alone, Canstar’s database recorded more than 50 cuts to fixed rates for owner-occupiers paying P&I, with an an average of 0.31 percentage points shaved off two-year fixed rates.

With that in mind, fixed rates may be looking like an increasingly appealing option for borrowers wanting to save money on their home loan by taking advantage of this record-low interest rate environment.

After all, the numbers show borrowers are not paying a premium to lock in their rate.

“The gap between the average variable rate of 3.47% and the lowest two-year fixed rate of 2.09% has blown out to 1.38% – a compelling refinancing argument for Australian home borrowers,” Mr Mickenbecker said.

The lenders now offering the lowest home loan rates on the market are subsidiaries of two global banking giants, HSBC and ING, and have seen their home loan market share increase in Australia in the 12 months to April 2020 – HSBC by 0.20% and ING by 0.08%, according to APRA’s latest statistics.

Lowest fixed rate home loans

The below table shows the lowest fixed rate home loans for one, two and three-year terms on Canstar’s database.

Lowest Fixed Home Loan Rates for 1, 2 & 3 Year Fixed ($400k, 80% LVR)
Fixed Term Lender Product Rate Comparison Rate
1 year Newcastle Permanent Premium Plus Package Residential Fixed P&I 1 yr 5k+ Special Offer 2.18% 3.83%
2 years HSBC Fixed P&I 2 yrs Special Offer 2.09% 2.98%
ING Orange Advantage Residential Fixed 2 yrs 150k+ 2.09%  3.77%
3 years ING Orange Advantage Residential Fixed 3 yrs 150k+  2.14%  3.62%
Source: – 1/06/2020. Based on 1, 2 and 3 year fixed owner-occupier home loans available for a loan amount of $400,000, 80% LVR and principal & interest repayments; excluding introductory and first home buyer only loans. Comparison Rate calculated based on a loan amount of $150,000 repaid over 25 years. Table sorted by fixed rate term, followed by comparison rate.

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