HSBC Is Leaving Australia:
What Does It Mean for Your Home Loan?

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What does the change mean for your HSBC home loan?

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The most important thing to understand is that you don't need to panic or refinance simply because HSBC is leaving.

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Your mortgage doesn't disappear, and the transfer itself doesn't automatically mean you will be moved onto a higher interest rate.

Pepper Money has said that existing HSBC customers' interest rates, fees, discounts and repayments will transfer with their loans, rather than customers simply being moved onto Pepper Money's advertised rates.

So, if you're happy with your current loan, there is no need to make a rushed decision.

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However, the organisation servicing your home loan is expected to change.

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That means you may eventually experience changes to things such as:

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• How you access and manage your loan

• Online banking and account management

• Statements and correspondence

• Customer service

• Other loan servicing arrangements

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More importantly, you now have an opportunity to decide whether you actually want to stay with your existing arrangement.

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If you originally chose HSBC because you wanted the security, reputation and broader banking relationship of a major global bank, you may now want to compare your options with Australia's major banks and other lenders.

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You don't have to wait until your loan is transferred to do that. The question isn't necessarily whether you need to refinance. It's whether your current HSBC loan is still competitive, suitable and aligned with what you want from your lender today. A review can help you find out.

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What should HSBC borrowers check?

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Before deciding whether to stay with your existing loan or refinance, look at these five things. Your mortgage specialist will be able to help you compare the different features and benefits to make an informed decision.

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1. Your current interest rate

When was the last time your mortgage rate was reviewed? If you've been with the same lender for several years, there's a good chance your circumstances and the lending market have changed. Even a small difference in interest rate can make a meaningful difference over the life of a large mortgage.

2. Your loan features

Don't compare rates alone. Check whether your current loan has features such as:

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• Offset account

• Redraw

• Multiple loan splits

• Flexible repayment options

• Fixed and variable portions

• Ability to make additional repayments

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If you use these features, make sure a new loan provides something comparable.

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3. Your current loan balance and LVR

Your loan-to-value ratio (LVR) can have a significant impact on the interest rates available to you. If your property has increased in value and you've reduced your mortgage balance, your LVR may now be substantially lower than when you originally obtained your HSBC loan. That could potentially put you in a better pricing position with other lenders.

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4. Your overall financial situation

Your circumstances today may be very different from when you first took out your mortgage. Perhaps:

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• Your income has increased

• You've paid down your mortgage

• You've purchased an investment property

• You've had a change in employment

• You've become self-employed

• You've taken on additional debt

• Your property has increased in value

• Your goals have changed

A mortgage review isn't simply about finding a cheaper rate. It's about making sure your loan structure still makes sense for your circumstances.

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5. The cost of refinancing

Refinancing isn't always free. Before switching lenders, it's important to consider any potential costs, including discharge fees, application fees, government registration fees, valuation costs and, if you're on a fixed-rate loan, any applicable break costs.

Some lenders also offer cashback incentives to attract new customers, which can help offset some of the costs of switching. Combined with a more competitive interest rate or better loan features, refinancing could potentially deliver significant savings.

The key is to look at the overall financial benefit, rather than simply focusing on the headline interest rate or cashback.

Your mortgage broker can compare suitable lenders, assess the costs and benefits of each option. 

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