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Borrowers could save £3bn a year, says HSBC

HSBC is claiming that borrowers could save at least £3bn a year if rival big banks were to cut their base rates and match its 4.6 per cent homebuyer rate.

The banking giant says competitors such as Woolwich, Abbey National, Halifax and Cheltenham & Gloucester charge around 2 per cent over the Bank of England&#39s base rate, currently 3.75 per cent.

As a result, many borrowers are paying an extra£1,000 on their mortgages each year.

HSBC claims a home-owner borrowing from Abbey Nat-ional, which has a variable rate of 5.79 per cent, on a £100,000 interest-only loan over 25 years would be paying £482.50 a month and £1,190 a year more than on the equivalent HSBC loan, which would cost £383.33 a month.

The bank also says that since 2000 it has had a policy of not charging more than 1 per cent over the Bank of England base rate.

Head of banking and mortgages Clive Wood says: “Too many lenders are getting away with inertia. They lure homeowners with short-term discounts and then charge over the odds for the rest of the term. Mortgage discounts are like crash diets – the pounds soon pile back on.”

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