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Matcher points

HSBC’s five-week rate matcher offer to all UK homeowners could see the bank suffer- ing huge service problems.

Last week, HSBC said it would match the current rates being paid by homeowners coming off fixed-rate mortgages, dependent on certain criteria being met.

The bank says it expects to treble the volume of business it usually does but brokers believe it has underestimated how much interest its offer will attract.

London & Country mortgage specialist Richard Morea says: “The volumes of business it might get through this deal could delay offers for up to two months. Service levels are a problem for everyone in the market at the moment so I would worry about how it is going to affect HSBC with this deal.”

The HSBC move comes as rival lenders are repricing their mortgage ranges daily to control the volumes of business they are attracting.

Rates have been raised way above the Bank of England’s base rate due to the lack of liquidity in the market.

John Charcol senior technical manager Ray Boulger says: “I think they have underestimated the interest they are going to receive with this deal. It is very likely that processing will not be that quick.”

HSBC says mortgage processing priority will be given to existing HSBC bank account customers in the first week of the campaign. It has also made it clear that it will not accept every customer, even if they fit within the restrictions.

Boulger warns that with HSBC “cherrypicking” customers, it could take up to three or four weeks for the bank to decide whether it will reject the application or not.

He says: “This is concerning for those that are rejected as they might find that three or four weeks later, the market has then moved on and there are even fewer attractive deals out there.”

Most brokers admit the rate matcher deal is a good offer but some are concerned it will mean less business for themselves due to HSBC only offering its mortgages direct.

The Mortgage Practitioner sole trader Danny Lovey says: “It is potentially a worry. I have got a lot of two-year and five-year fixed rates which are coming up for renewal so this could see them go for this deal.”

Boulger says: “Any direct lender that has a good deal is clearly going to have the potential to take some business away from brokers. It is frustrating that they do not offer it through introducers. Brokers need to be honest with their clients and point out the best deal if this is it. This will score brownie points with the customer and hopefully retain goodwill.”

The deal does impose restrictions so brokers claim it will not be the best deal for everyone. HSBC says it will match rates as low as 4.54 per cent for a further two years.

It will accept applications from customers whose fixed-rate product is due to mature before June 30and where borrowing is limited to 80 per cent loan to value.

The maximum loan under rate matcher terms will be £250,000. Customers will be asked to pay a fee to match their old fixed rate but HSBC claims around three-quarters of customers will pay a fee of £999 or less. It has set up a fee calculator on its website so that people can check the fee payable on their mortgage.

HSBC head of mortgages Martijn Van Der Heijden says: “Many homeowners are worried about their monthly repayments going up and we can help take away that anxiety. Rate matcher helps customers plan budgets over the medium term and eases the shock of seeking new borrowing when old rates expire. We are pleased to be in a position to help.”

Boulger says he has been told that fees could be as high as £5,000 for people with a very low rate and a big mortgage.

He says: “Overall, the value is quite good. The examples that I have looked at would effectively mean a two-year fixed rate at around 5.35-5.4 per cent – after the fee has been added on – which is a very competitive deal at the moment. It would be wrong to criticise this deal because it is good.”

Morea says: “I would not want to knock the deal but borrowers need to weigh it up with what else is on the market.”

Baronworth director Michael Brill believes clients will still see the value in having an adviser search the whole market.

He says: “I am not worried that the deal will lose me business. A lot of people will not realise this offer is available and they also will not know whether another lender will start doing a similar thing next week and another the next. I believe they will still come to brokers to find out who is the most competitive because it will not be HSBC for everybody.”

Brill points out that brokers should recommend HSBC to clients if it turns out to be the best offer and charge a fee for searching the market.

Needanadviser.com chartered financial planner Ashley Clark says: “HSBC is not playing to the intermediary’s client. It is playing to people’s fears and if people are scared, they may go for this product whether it is a good deal or not.

“But do I really think that one product offered by one bank will have an impact on my business? No. I believe that if an intermediary has a good relationship with their client, this deal will not lose them business.”

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