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HSBC warned of challenges following shock broker lending announcement

Mortgage brokers say HSBC may need to loosen its lending criteria after the bank announced shock plans to lend through intermediaries for the first time.

Brokers are concerned HSBC’s current criteria are too strict and say the lender must be open about its approach if its foray into the intermediary market is to prove a success.

The bank will distribute its mortgages through Countrywide initially but plans to widen its distribution over the coming months. 

It is offering a limited range up to 80 per cent loan-to-value through Countrywide and says it will not dual price.  

Perception Finance managing director David Sheppard says: “It is obviously a positive step that HSBC has finally decided to work with the broker channel but it will have to review some of its internal processes. I’m sure I am not the only broker who has seen a lot of clients who have previously been turned down by HSBC.

“If HSBC wants to make the most of the broker channel it will have to be more upfront about what good business looks like – what will go through and what will not.”

He adds that HSBC’s policy of charging non-refundable fees upfront could also impact its lending volumes.

Middleton Finance managing director Daniel Bailey agrees. “I’ve certainly had many clients through the door after being turned down by HSBC,” he says.  “It’s great that the bank is opening up to brokers but having low, often market-leading rates is not enough.

“Cases get agreed in principle and later in the process they turn into a decline. Processing times, late rejections and problems of that nature can really have an impact on how much business the bank will get through brokers. It is a positive step but HSBC certainly needs to review things.”

Private Finance mortgage and protection consultant Simon Marsh says: “If service levels are poor and a large number of cases do not make it through to completion, the proposition will not last very long.”

HSBC declined to comment.

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Michael.White.BoutiqueCapital - Bridging Loans 8th October 2014 at 2:03 pm

    The doubters begin to express their concerns on the new distribution strategy….. HSBC have always adopted a very simple yet primarily conservative due diligence process.

    The ‘underwriters’ are essentially looking at ways were there could be an reason to decline…. if this ‘fails’ then they can approve, albeit reluctantly at times…..a 40% loan would be declined as quickly as a 75% loan if a couple of minor credit card etc., issues are uncovered.

    I very much doubt this credit risk management process for HSBC is likely to change any time soon.

  2. Most lenders are in the process of making ongoing tweaks since MMR anyway. I think this is a great time for HSBC to enter the broker market, for brokers, clients and HSBC. I acknowledge that when a lender has a history of almost scorn toward the broker market, a degree of skepticism is inevitable and naturally not everyone will be so welcoming. The point to remember is it does benefit the client so any ill will is not useful and will hopefully diminish quickly, so HSBC maintain open to broker clients who have perfect backgrounds. I do think HSBC must have wasted a lot of time to processing since MMR to have such a huge U-turn anyway, please recognize when we win.

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