HSBC bucks the trend

April 11th, 2008

They say the exception proves the rule and the bright exception to the gloom in the credit market has been revealed. While other banks are slinking out of the credit market with their tails between their legs Britain’s biggest bank, HSBC, is trying to lure in tens of thousands of mortgage customers whose fixed rate deals are expiring with other lenders.

From Monday 14 April, HSBC will match peoples’ expiring fixed-rate deals for a further two years. However the offer will be open for just five weeks, new customers will have to put down a minimum 20% deposit, and they will be charged a large fee.

An HSBC spokesman said “this is not too good to be true”. HSBC, which relies less on the financial markets to raise the funds for its mortgages than other lenders, is keen to take advantage of the weakness of its competitors in the mortgage market.

The bank is expecting huge demand for its latest offer and will use three times the usual number of staff to handle applications. Its minimum mortgage rate under its deal will be 4.54%.

The bank stressed that it would be fussy about whose business it took on, and that it was not seeking to hoover up hundreds of thousands of mortgage holders who may have taken a mortgage recently with only with a small deposit.

But the bank admitted it was exposing itself in some instances to offering new mortgages at what would now be exceptionally low interest rates, in some cases even below the Bank of England’s current base rate of 5.25%.

The bank estimates that 72% of its eventual customers will pay a fee of less than £1,000 and that 57% will pay less than £600. Its deal will be open to people whose fixed rate deals are due to expire by 30 June this year and the maximum loan will be £250,000.

More than a million households are expected to face higher mortgage bills this year as their special deals end. Many other lenders, including HSBC’s own internet bank First Direct, have been withdrawing their mortgage products in the past few weeks, as the credit crisis makes it harder for banks to borrow money.

This entry was posted on Friday, April 11th, 2008 at 5:08 pm and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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