HSBC bank has launched a record low home rate of 3.87 per cent - but those who take it up must borrow at least $500k, or have investments worth over $100k with it.

The low rate is the latest offer from the bank which last year ran a special rate of 3.95 per cent - the lowest residential mortgage rate in New Zealand for over 50 years at the time.

Chris Russell, CEO of HSBC in New Zealand, said it was launching the rate to celebrate the bank being in operation in New Zealand for 30 years.

"In 1987, HSBC became the first overseas bank to be granted a banking licence in New Zealand, and 30 years later New Zealand continues to be a strategically important market within HSBC's global network," he said.


The rate is for an 18-month fixed term.

The bank said the rate was only being offered for a limited time to new HSBC Premier customers, and existing HSBC Premier customers who borrow at least an additional $100,000.

An individual can qualify to become an HSBC Premier customer either via a minimum combined home loan of $500,000 or $100,000 in savings and investments with HSBC.

To qualify, customers have to provide an owner occupied property as all or part of the security.

The banks said minimum deposit and equity criteria also applied.

BNZ also reduced a home loan rate. Its 2-year carded fixed offer is now 4.69 per cent, 6 percentage points lower than its previous rate, to match its main rivals.

Massey University associate professor David Tripe wasn't expecting that other banks would rush to match the HSBC rate.

"HSBC, as I understand it, have good funding sources through their network...and they're keen to get some loans out to some good customers.


Tripe said that generally rates had stabilised but were expected to go up in the next 18 to 24 months.

"People are picking the Reserve Bank to push [the] Official Cash Rate late next year early 2019 so that would all be consistent with that sort of outcome," Tripe said.

Glen Tonks, head of retail banking and wealth management at HSBC New Zealand, said the rate was not a loss-leader and the bank was serious about growing its business.

"We are serious about growth in New Zealand. This is not a stunt."

Tonks said the bank had grown above the market rate this year with much of the growth coming from Auckland, despite a slowdown in the city's housing market.

"The reality is many people have mortgages over half a million dollars."

Tonk said it was pleased with the number of people switching their mortgages to it.

He would not give a timeframe for how long the offer would be available for but said it was for a limited time.

Asked if the bank planned to continue offering ultra low rates he said: "Generally interest rates are rising. The US Federal Reserve has signalled its next move is up."

"What we are committed to is being consistently competitive."