by Mark Johnston
Martijn van der Heijden, head of lending at HSBC has recently claimed that the banking giant decided to reduce their interest rates on part of their mortgage range in an attempt to provide some financial help to some of their customers.
Martijn van der Heijden said: : “Our 2.79 per cent discount mortgage is designed to help homeowners, many of which are facing a tough time.”
Their 2.79% mortgage was one of several products they reduced prices on. Others includes their two and five year fixed rate mortgages and two tracker mortgages. All the mortgages only require a £99 booking which is a stark comparison to other banks and building socities who are charging up to £1,999 in fees.
HSBC hope that reducing their fees will help those customers who are struggling in lower incomes in the economic downturn which was brought on by the credit crunch two years ago.
Recently the bank was recognised as the largest direct mortgage provider in the UK. One in four direct mortgages are now provided by HSBC. The HSBC Council of Mortgage Lenders have reported that HSBC issued almost 10 percent of all new mortgages in the UK which is an increase from three percent between 2000 and 2007.
The global bank was one of the new lenders that weathered the financial crisis and came out in a stronger position than competitors. Industry insiders have attributed this to the bank sticking to traditional banking methods of sustaining a strong loan to savings ratio and a strict lending criteria, but without restricting the amount to lends to its customers as it still has a higher than average level of acceptance for mortgage applications.
Martijn van der Heijden, head of mortgages for HSBC, said: “As research shows more and more lenders are now reserving their lowest rates for either existing customers or those happy to deal with them directly.”
Research from a leading price comparison website showed thats HSBC’s direct mortgages accounted for 93 percent of the best mortgage rates offered in the market over the past two years. Some suggest that this is another sign that banks and building societies are moving away from mortgage brokers to be able to offer customers cheaper mortgages but others fear that customers are missing out of valuable professional advice when they go direct to a lender.
HSBC believes that selling its mortgages direct to its customers instead of going through a mortgage broker is the best way to provide good deals to its customers as they think they are best placed to sell mortgages.
Sarah Gwilt, an Independent Financial Advisor raised concerns that the research did not reflect the value of independent mortgage advice as many would direct their clients to HSBC anyway.
Sarah said: There are many intermediaries such as myself who do recommend the likes of HSBC so my belief is that, if the intermediaries were not there, the banks’ market share would be lower.
She went further by saying: “I am a firm believer of getting advice from the whole market. Because they are the cream of the business, banks can offer good rates but that is not to say that they always have the best rates. There are intermediaries who can offer better products.”
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