HSBC’s £1bn boost to first time buyer market
HSBC has allocated £1 billion to a new 90% loan to value product which it is hoped will give a much needed boost to the first time buyer market.
The product will not, unfortunately, help those homeowners who have seen the value of their homes drop during the recent economic crisis and now find themselves in negative equity, as the 90% deal will only be available to homebuyers and not to those re-mortgaging. However the first time buyer market is still very much in the majority at the moment when it comes to needing help and a choice of products. Other deals have also been released catering for those with larger deposits and also for re-mortgagers.
What’s good about these deals is that, for the last 18 months, the cost of mortgages for those with smaller deposits have been largely too expensive to be affordable, although at the lower loan-to-value end of the market products have remained largely competitive. So it looks like HSBC are leading the way to try and offer a realistic way for first time buyers to make their way onto the property ladder.
The deals do come with a few conditions however.
The first and probably the most tying is that the 90% deals will only be available to HSBC Plus and Premier customers. The bank will allow people to open these packaged accounts in order to take advantage of the deals and this will be no problem to existing customers, or those who are already looking for a packaged account, but new customers should take the £12.95 a month fees (at the moment, first 3 months are £9.95) into account.
The second is that the maximum loan value at £400,000 but as the deals are aimed at the first-time buyer market, this will take care of the majority.
The deals
The headline deal is a two year fixed rate at 4.99%, with a fairly hefty fee of £1499.
A lower fee, higher rate combination is also available, this one is also fixed and 5.49% with a £199 fee.
There’s also a variable rate option for those who don’t want a fixed term product and at the moment it is the only variable rate 90% LTV mortgage available. The fee is £999.
For lower LTV/higher deposit:
A three year fixed rate at 3.99% with a minimum 25% deposit and a fee of £599
A two year discounted rate at 2.49% with a minimum 40% deposit and a fee of £249.
HSBC says that the new deals reflect its commitment to continue lending o UK homeowners at competitive rates, and that it wants its first-time buyers to be able to take advantage of the falling cost of borrowing and the fact that it has launched such rates at 90% LTV is definitely a step in the right direction.
The bank has not, unlike many rivals, had to rely on state financial support and has come under pressure to increase its lending. HSBC intends to lend £15bn in total this year, around twice as much as it lent in 2007. Following on from the RBS offering for LTVs up to 90%, hopefully other lenders have taken note, and at least have to think of following suit.
Tags: first time buyer, leading the way, hsbc, support, deposit, Mortgages
