Last week, the lender – which has pledged never to deal with intermediaries– launched the two-year fixed rate at 1.99%, which requires a deposit of 40%. The offering marks the latest in a line of market leading deals that intermediary lenders have so far failed to match.
Although the rate is only available to direct customers, the deal comes at a time when Woolwich and Cheltenham & Gloucester announced they were either trimming their rates or launching new products. The rate changes have sparked hope that some form of competition could be about to return to the market.
Jonathan Cornell, head of communications at First Action Finance, admitted that HSBC’s offer would ‘make life harder for brokers’, but stressed that the vast majority of applicants would not qualify for the rate. He explained: “Most brokers whom I have spoken to have rolled their eyes, as if to say ‘not again’. But I do not think this will hurt the intermediary sector too much because HSBC will have service issues
and not many will qualify.”
Cornell said he expected more competition in the sector as a result of the deal as other lenders react to the offer.
He added: “There have been a few lenders nibbling away at pricing, but it has nothing to write home about so far. A direct-only deal does make things harder for brokers but if it encourages competition then it may have a positive effect on the other players.”
Mark Harris, managing director of Savills Private Finance, dismissed the threat to the intermediary sector, explaining that many HSBC customers had been kept waiting a long time for deals in the past and often did not securing the rate anyway.
“Overall, it is good for the market to inject some competition. Others will have to follow now. There has been an over-correction of rates. The pendulum swung too far in 2007, and then came too far back in 2008 and 2009. Hopefully, we can now find some middle ground.”
Ray Boulger, senior technical manager at John Charcol, said HSBC had made its move in order to meet its own lending targets, but he was not convinced that the offer would spark competition.
He said: “One can always be hopeful that rates will become more competitive, but I
think the recent cuts were more a result of swap rates falling.”
