HSBC Home Loan Review
Founded: 1866 overseas, 1965 in Australia
Owned by: HSBC Group, listed on the London Stock Exchange
Funded by: Retail deposits and wholesale capital markets
LMI provider: Genworth
Lender type: International Bank
HSBC is the 5th largest bank in the world and has been a popular choice in Australia for people of Chinese descent and international borrowers.
They built up a large following using their partnership with mortgage brokers only to withdraw from the broker market and sell their customer’s loans to Firstmac in a surprise move in 2006.
They’ve predominantly targeted the Chinese community in Australia for home loans and overseas for investment loans, as they recognise the HSBC brand from Hong Kong where it has a much larger presence.
How do HSBC’s home loans compare?
They’re great at
But they’ve got some drawbacks…
- They don’t suit most first home buyers with a low deposit
- Focus is primarily on the Chinese community
- They target the migrant community but you can usually get a better deal at another lender
- People with a bad credit history
- No branch access
- They don’t work with mortgage brokers
- They’re not a major bank in Australia
- They’re not great at construction loans
- Self-employed borrowers who cannot prove their income
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But there’s a catch…
They don’t deal with mortgage brokers, which means there isn’t someone on your side to keep the bank honest!
Will your HSBC lender call you up to let you know that your rate is no longer competitive? Of course not!
It’s almost certain that older HSBC home loans will be on a much higher interest rate than the home loans being offered to entice new customers.
If you choose to go with HSBC, then you need to check your interest rate every year to make sure that they haven’t played any games. We regularly check the rates of our customer’s loans and either renegotiate or refinance if their lender can’t give them what they are giving to new customers.
What are HSBC really good at?
We think HSBC is a market leader with their Market Linked Loan. This is a foreign currency loan that can be used by foreign investors or Australians who have an income in another currency.
Just say you are earning USD or HKD. If the Australian dollar goes up, you’re making much higher repayments on your Australian investment loan.
By putting the loan in the same currency as your income, you reduce this risk, and introduce a new one. Your home loan could end up being much larger than the value of your home if the Australian dollar falls.
Foreign currency loans typically have much lower interest rates than Australian loans, so they tempt a lot of people who really don’t know the risks or how exchange rates work.
HSBC’s standard home loans including their Variable Rate Loan, Home Value Loan and Home Smart Loan often have a low rate and at times they are comparable to the market leads. Their fixed rates are quite good and they tend to have one fixed rate term (e.g. 3 years) that is a market leader while the others are not as competitive.
Compare HSBC to other lenders
Not sure which lender is right for you? Our Home Loan Experts can help!
Talk to one of our mortgage brokers by calling us on 1300 889 743 or complete our free assessment form.