HSBC Bank plc Lowers Mortgage Rates for New Customers

by Mark Johnston

Yes, today HSBC Bank plc has made the bold move and lowered it’s mortgage rates for new customers who live in the United Arab Emirates (UAE). The rates have been decreased across its variable mortgage products and over its Amanah Home Finance for only new customers. This is effective immediately.

Amanah Finance is Islamic financing, an arrangement where a person holds property or funding in trust for another. This Shariah compliant financing allows Islamic people to take advantage of financial products and services without compromising their religious beliefs.

HSBC is very conscious and sensitive to all faiths and has many varied options. Amanah applies a variety of Islamic instruments in the development of its products. A Mudarabah transaction is a sale with a predefined profit included in the price. The bank would purchase an item or product from a third party and then sells it to the client for a profit on a deferred payment term. The client is therefore able to buy something without taking an interest-based loan.

For new home borrowers and for loan buy-outs, HSBC has offered a new rate of 5.49 per cent on completed purchases. This is with a deposit of 40 per cent or more. One more advantage is that the arrangement fees are to be reduced. The best deals will go to the HSBC premier customers who will receive a massive 75 per cent discount on the arrangement fee and the HSBC Advanced customers with receive a very modest 50 per cent reduction and Personal Banking customers a satisfactory 25 per cent discount on the arrangement fees. There are minimum salary requirements to qualify for the loans and to purchase property

Variable rate loans are generally a recommended option where it is anticipated that interest rates will continue to decline but in the current economic conditions, with a very low interest rate at the moment, it’s generally accepted that the Bank of England Monetary Policy Committee will raise the base rate within the next 12 months. But low interest rates will entice first time buyers into the market with the benefit of initially lower monthly repayments.

Another advantage of the variable mortgage is that qualification entry criteria are somewhat lower than with the fixed rate mortgage offers. Often monthly payments are affordable and allow the borrower to buy a more expensive home. Low interest rates allow the borrower to use that extra money for other parts of their household budget, certainly a factor worth considering when VAT has just gone up to 20 per cent.

Also, there are often introductory interest rates, which attract the borrower away from fixed rate repayments in favour of these temporary introductory lowered interest rates. Remember, your loan will need to be paid back in full and breaks and lower interest rates at the start may end up causing the length of the loan repayments to extend and may cost you more money in the long run.

The Head of Assets and Liabilities within the UAE, James Pearson has said, “The changes we are making are great news for those looking to buy a house in the UAE, where valuations are now very attractive. HSBC is committed to offering competitive deals that are designed to deliver great value to the customer.”



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