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HSBC turns to the broker channel – market reaction

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  • 02/10/2014
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HSBC will begin distributing mortgages through intermediaries from 6 October through Countrywide Mortgage Services.

In an exclusive blog for Mortgage Solutions Nigel Stockton said he was proud that Countrywide had been selected as the first brokerage to partner HSBC on this journey.

The news of the change in its distribution strategy, which Jonathan Byrne, head of assets and retail banking at HSBC described as a ‘natural step’ has been met with warm, but in some cases, combative reactions.

Mortgage Solutions asked the market for its views on HSBC’s change of heart.

Dominik Lipnicki, director of Your Mortgage Decisions, described the decision as a huge U-Turn on in its previous policy to ignore the broker channel which ultimately, shrank his market share.

“I am far from surprised that HSBC has finally decided to offer mortgages through independent brokers. They of course need to meet their lending targets and branch sales were never going to do that alone. I have long asked if direct-only deals or dual pricing were ever TCF. Surely borrowers should have access to the best possible products that match their needs when speaking with their mortgage broker.”

Rob Clifford, group commercial director of Shepherd Direct Group, said having worked with HSBC on an intermediary pilot in the nineties he can recommend them as an excellent partner.
“Our business, MPI, sold HSBC group products (as a mortgage broker) in 1991 to 1998, principally using the First Direct brand. At that time HSBC were very sensitive about the intermediary market, such that the arrangement was even entitled ‘Third Party lending’ and very much controlled by the bank in terms of access and volumes – it worked really well for both the bank and for us”.”

Ashley Brown, director, independent mortgage broker Moneysprite, said HSBC, which has earned its bad boy image from poor service and the exclusion of brokers, was clearly struggling in the post-MMR world.
“I’m not surprised that HSBC has decided to deviate away from their current model as the high street banks struggle with the constrictions of the MMR in-house. However, teaming up with Countrywide, as opposed to a network, is an interesting choice for the bank.
Countrywide has a restricted panel of just a few lenders, which should enable HSBC to operate in large volumes and trial this new business model in a safe environment with a national reach.

“In the long term it’s a good thing for clients and advisers alike and for the first time shows that HSBC is willing to play ball.”

Ray Boulger, senior technical director at John Charcol, is looking further out to how HSBC plans to roll out to the wider market.

“It’s great news that the last major direct-only lender has now recognised the value of intermediary distribution, although the MMR has clearly been the catalyst.

“HSBC’s lending last year fell 12%, and its market share even further, and so it is good to see it has been pragmatic enough to quickly recognise that in the new world if it wants decent volumes it has to engage with the intermediary community.”

Andrew Montlake, director of Coreco, said this major move shows the importance of the intermediary sector.

“I suspect there will be very few, if any, direct-only lenders in the near future and this is ultimately good news for consumers. We congratulate Countrywide on securing this and genuinely hope that the partnership works well and is extended to other partners in due course.”

David Hollingworth, associate director, communications, London & Country Mortgages has high hopes for HSBC’s partnership with brokers.

“I’m sure that HSBC, brokers and importantly their clients will only find that there are benefits from the move. In fact, our previous experience with direct lenders that have opened up to brokers, like ING and Post Office, have proven to be extremely positive partnerships.”

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