In a move likely to win few tributes from lenders and brokers alike, last week HSBC made the bold move of offering to match the interest rate of any borrower coming off a fixed rate deal. With average rates for fixed rate loans now hovering around the 5.5% mark, a hark back to the heady days of sub-5% rates could not fail to cause a stir.
In a week where it was announced house prices fell at their fastest rate since 1992, this story made more front pages and led more bulletins. Who says the media never reports good news? Some suggested it was a move done to distract from the news HSBC lost a disk containing the details of about 370,000 customers at the start of the week, but that would be cynical. Wouldn’t it?
In what could long be remembered as a brilliant marketing move, the lender has positioned itself in the perfect win-win situation: it scored a direct hit in the battle for hearts and minds, riding in as the white knight of the mortgage market. And it should be able to increase its market share substantially by cherry-picking the business it wants as clients walk through its door. The only problem for the lender seems to be how it will cope with the stampede of applications.
And it could be a literal stampede, as the lender was quite clear it will maintain its position of only accepting business through its branch network, not through intermediaries.
However, it could soon find itself subject to criticism if only handfuls of borrowers can actually get hold of these deals. Anyone working their way through the maze of criteria restrictions will note HSBC is not being as generous as it seems.
Despite claiming not to be affected by the credit crunch – insofar as it does not borrow from the money markets in order to finance deals – it is not throwing its doors open to all the 1.4 million borrowers due to remortgage onto a potentially much higher rate this year. If a deal looks too good to be true then it usually is.
I am not trying to denigrate HSBC here, and if it does manage to restore some confidence to the market then it should be applauded.
What we should now be doing though is looking at the seriously big players in the market and watching their next moves with interest. n
