HSBC offers to match existing deals for remortgagers

HSBC has bucked market trends and confirmed it will match existing fixed-rate deals for customers looking to remortgage.
The company, Britain's biggest bank, announced it will match present rates for up to two-years – extending a deal formerly available only to HSBC's customers.

Borrowers will be able to take up the offer for the next five weeks – with the potential of meeting rates as low as 4.54 per cent.

The move sets HSBC apart from the majority of the mortgage market, which has seen a sharp reduction in the number of products available.

Both First Direct (a division of HSBC) and Scottish Widows have removed their product ranges entirely from the market in the past few weeks, while other lenders have curtailed lending to higher risk groups.

HSBC has now moved into to fill this void, hoping to expand upon the three per cent of the UK mortgage market it presently controls.

Among the key targets for the company will be the 1.4 million borrowers identified by the Financial Services Authority (FSA) who will finish fixed-rate deals this year, and will consequently be looking for a new mortgage.

The company is expecting to treble its business as a result of such an announcement, and has taken on additional staff in preparation.

However, mortgage experts predict demand brewed from the offer could offer as much as ten times the usual level of business for HSBC.

Due to HSBC's funding mix, securing a larger degree of its liquidity through savers deposits than through wholesale money markets than other lenders, it remains in a position to offer competitive deals.

"We are in an incredibly strong position while others are stepping back," said Joe Garner, UK personal services head at HSBC.

"We remain competitive and are selective about the right sort of business."

However, the arrangement will not be suitable for all.

Borrowers must be in possession of at least twenty per cent of the equity on their property, a caveat likely to exclude many recent buyers whose mortgages were high loan-to-value deals, while there will also be a fee attached – which could be greater as the offered interest rate diminishes.

David Hollingworth, of brokers London and Country, called the HSBC decision a "positive initiative for customers".

However, concerns remain over the size of potential mortgages on offer; with suggestions those with the need for a smaller mortgage may not find the deal financially beneficial.

A smaller mortgage with a larger fee, for example, may not be the best deal for a borrower over a short two-year period.

Furthermore, doubts were raised over borrowers looking to refinance after a longer-fixed rate period.

As Mr Hollingworth pointed out, lenders finishing a five-year fixed-rate deal are likely to be on a lower rate than the minimum 4.54 per cent offered by HSBC.

However, while HSBC can expect an upturn in demand for their products, the simplicity of their offering is likely to ensure sufficient resources are in place.

The product provided by HSBC is not a bespoke offering – the organisation is giving buyers the change to match existing conditions, simplifying the process involved for both parties.