Its two- and five-year fixed fee saver and standard deals within this tier have seen rate increases, as has its five-year fixed premier exclusive deal at 60-90 per cent.
These products now have rates varying from 1.99 per cent for those with larger deposits and 3.34 per cent at higher LTV tiers.
The two-year tracker between 60 and 90 per cent has also gone up in rate.
At 60 per cent LTV, the two-year tracker rate is now 1.79 per cent and 1.99 per cent at 70 and 75 per cent LTV. At 95 per cent LTV, the rate for a tracker mortgage is 2.89 per cent.
The bank has recently made a number of changes to its mortgage range in an attempt to manage demand, including the withdrawal of its 90 per cent LTV deals for new customers.
HSBC’s 90 per cent and 95 per cent LTV mortgage rates are only available to existing mortgage customers who are switching rates.
These changes are effective from today.
Earlier in the week the lender stopped taking new business at 90 per cent LTV, noting that it had seen “very significant increased demand for higher LTV mortgages”.
Rates have now been increased by up to 0.25 per cent as it is understood the lender took several factors into account, including managing demand following its announcement this week.
At 85 per cent, LTV two-year fixes have been increased by 0.15 and 0.2 per cent with a £999 fee and without a fee to 1.99 and 2.44 per cent respectively.
Likewise, five-year deals have increased by 0.15 and 0.25 per cent to 2.49 and 2.79 per cent respectively, while the two-year tracker has been increased by 0.25 per cent to 2.29 per cent plus the Bank of England base rate.
Rates on products in the 60, 70, 75 and 80 per cent LTV ranges have all been increased by between 0.1 per cent and 0.25 per cent.
The 90 per cent LTV range is still available for internal customer switches and these rates have also been increased by up to 0.25 per cent.
The lender said it was making the move, which came into place today, as a result of “very significantly increased demand for higher LTV mortgages”.
It will continue to offer products above 85 per cent LTV for existing customers switching rates.
Customers with appointments in place for mortgages over 85 per cent LTV and pipeline applications from brokers and customers that have already been received will be progressed subject to the usual checks, it added.
The lender had been one of the few to continue offering 90 per cent LTV mortgages for new customers since the coronavirus pandemic hit, but has finally had to take a step back.
Significant service level consequences
HSBC UK head of buying a home Michelle Andrews said: “While the worst effects from Covid-19 appear to have thankfully passed, the country and the housing market have yet to return to normality.
“Mortgage market participation has been volatile at higher LTVs which has led to significant consequences on service levels and our colleagues for those who, like HSBC UK, have remained open for business at those higher LTVs.
“This is a temporary change for us. We look forward to other lenders joining us back in the market as well.”
Andrews noted that easing lockdown and the stamp duty cuts had “injected fresh impetus” to first and second-time buyers who may have a smaller deposit.
However, she added the increase in demand meant the lender was not able to satisfy service levels and did not want to face putting property purchases at risk.
“Offering a competitive product and being able to provide a great and timely service is extremely important to us and the recent significant uptick in applications has meant that we have not been able to consistently meet the high standards we set ourselves, which is not always a positive experience for our customers and can delay and put a property purchase at risk,” Andrews continued.
“As such we continually review our proposition and service levels and adjust how we are working and try to manage the inflow of new cases.
“Temporarily reserving our mortgages at over 85 per cent LTV for those switching rates only is not a decision we have taken lightly, but one we will be reviewing regularly.
“We remain open for business and continue to support our customers and the wider housing market.”
In 2019 gross lending for homeowners and buy-to-let landlords totalled £268bn, down 0.3 per cent on 2018, the figures from trade body UK Finance confirmed.
Overall, the top six lenders were responsible for £189bn of lending, up £7.5bn on the previous year and accounted for more than 70 per cent of all new mortgage business completed in 2019 – up from 67 per cent in 2018. (See table below)
However, while Lloyds Banking Group, NatWest, Santander and Barclays all saw notable increases, Nationwide and HSBC lost volume and market share.
Lloyds Banking Group, which includes Halifax, was once again the biggest mortgage lender in the country and saw the largest growth, increasing its lending by £3.5bn to £46bn and growing its market share by 1.4 per cent to 17.2 per cent.
NatWest Group, formerly known as Royal Bank of Scotland, moved to within touching distance of overtaking Nationwide for the second largest lender in the country.
NatWest gained £3bn in lending volume and 1.2 per cent of the market to take it to a total £33.5bn and 12.5 per cent share respectively.
In contrast, Nationwide completed £33.7bn in lending, a drop of £2bn and loss of 0.7 per cent of market share.
Santander and Barclays completed £30.9bn and £24.9bn of lending respectively, with gains of £2.6bn and £1.8bn respectively.
But after several years of strong growth as it continued to roll out into the broker market, HSBC lost ground, completing £20.1bn of lending, £1.4bn less than in 2018.
Overall, building societies and mid-tier lenders lost £1.8bn and £3.5bn in new business compared to 2018, according to the UK Finance figures, with banks gaining £7.5bn. Specialist lenders were largely unchanged.
While it is the first time since 2014 the big banks have controlled more than 70 per cent of mortgage lending, it remains far away from 2009 when they claimed more than 80 per cent.
Falling share
The combined Virgin Money Group, which includes Clydesdale Bank, saw its new mortgage business fall by £2.5bn to £9.3bn.
As the intense competition took hold, the lender made public statements during the year that it was not prepared to conduct higher risk lending just to gain market share.
Meanwhile, Metro Bank also saw a sharp fall in its lending by £1.9bn as it weathered the storm from regulatory and capital issues.
And Atom Bank, which had previously created much energy in the market with some of the lowest rate products ever launched saw its business shrink by two-thirds, falling by £800m to £400m.
Big gainers
Outside the big six, TSB saw the biggest gain as it increased lending by £1.1bn taking it to £5.9bn in total with 2.2 per cent of the market.
Skipton Building Society was the most positive mutual, increasing lending by £500m to take it to £4.6bn, while Newcastle Building Society and Aldermore both grew their lending by £400m.
The merged One Savings Bank, bringing together Precise Mortgages and Kent Reliance, secured £3.8bn of new lending, a £300m growth on 2018.
Ring-fencing takes effect
UK Finance analyst for data and research Callum Bilbe explained that the UK ring fencing laws were likely to have played a significant part in the gains made by the largest lenders.
“Because UK retail banking is ring-fenced, it means there are only certain things that banks can do with the money from borrower deposits,” he said.
“As deposit levels are on average higher than lending levels, these large lenders have used surplus retail deposits in the ring-fenced organisation to increase mortgage lending.
“This increase in supply of mortgages has contributed toward the average price of new mortgages dropping significantly, as larger building societies and mid-tier lenders compete with the largest banks to attract borrowers to their products.”
Bilbe added that capital weighting rules were more favourable for larger lenders which further reduces the cost of funds and helped to drive down pricing.
“However, specialist lenders continue to thrive in market segments where manual underwriting is required, such as for self-employed customers or those with more complex incomes,” he continued.
“Larger, and to some extent mid-sized firms, are less able to compete in these segments as their largely automated systems are unable to provide the tailored approach to these loans that is required.”
In an email to brokers, the bank said the new lending limit for flats would be cut to 85 per cent and new build flats would be reduced from 85 per cent to 80 per cent LTV.
HSBC borrowers looking for additional borrowing are now restricted to 85 per cent LTV.
Homeowners who want to take their mortgage on an interest-only basis, and are using an investment or a stocks and share ISA as the repayment vehicle, now have to provide their latest investment statement which must be dated within 35 days.
HSBC will allow the homeowner’s interest-only mortgage to be a maximum of 50 per cent of the investment value.
To use the sale of another property as the exit strategy, borrowers must be able to provide the latest mortgage statement dated within the last 35 days.
The changes take effect from Monday 17 August.
Bank of Ireland (BoI) has introduced four new products at 85 per cent LTV.
There are a pair of fee-free deals, both with a standard valuation included and sliding early repayment charges (ERCs). The two-year version is at 2.88 per cent with the five-year version at 2.9 per cent.
A Help to Buy fee-free deal fixed for five-years is available at 2.99 per cent, while a first-start product for purchases only is available at 2.95 with a £995 fee. This includes £400 cashback and a minimum loan of £50,000.
Post Office Money has also introduced a pair of 85 per cent LTV residential fixed-rate products – both come with no fee and include valuation and standard legals.
The two-year fix is at 2.95 per cent and five-year version is priced at 2.97 per cent.
Platform – updated
Platform has delayed the incoming changes to its mortgage products until Monday 17 August – it had originally announced the moves would be made on 14 August.
The lender is making a series of product changes which will leave its maximum LTV at 80 per cent, with only five-year fixed rate products available.
The lender told Mortgage Solutions it had taken the decision “to temporarily withdraw some of our products from the market following an unprecedented demand for new mortgages”.
“We are prioritising existing applications to ensure we’re able to maintain our service levels for customers. We will be aiming to reintroduce some of the products as soon as possible,” it added.
Standard residential products will be available at 60 per cent, 70 per cent, 75 per cent and 80 per cent LTV with zero fee or a £999 fee, while a 60 per cent LTV deal will be available with a £1,499 fee.
Help to Buy deals will be offered at 60 per cent and 75 per cent LTV with either £0 fee or £999 fee.
It added that it was taking the opportunity to re-introduce some of the products temporarily withdrawn last week.
HSBC
HSBC has also confirmed the rates for its 60 per cent LTV deals which have been cut today by up to 0.2 per cent.
The two-year fixed, no fee, is down from 1.64 per cent to 1.44 per cent with the £999 fee version down from 1.24 per cent to 1.14 per cent.
The five-year fixed, no fee, is down from 1.74 per cent to 1.59 per cent and the £999 fee deal down, from 1.49 per cent to 1.34 per cent.
HSBC’s two-year tracker with a £999 fee is down from 1.34 per cent to 1.24 per cent while its Premier Exclusive five-year fix with a £1,499 fee is down from 1.46 per cent to 1.31 per cent.
From Thursday, the bank will cut rates on six products which include a mix of fixed and term tracker rates, with and without fees. The cuts are applicable to two and five-year deals.
To accompany the rate cuts, the bank is extending its two and five-year fixed rate end dates to 31/12/2022 and 31/12/2025 respectively.
Full applications must be completed by Wednesday 12 August to secure a product from the bank’s current range.
All supporting documents must be provided within 21 days of submission.
Earlier this month, HSBC reported £9bn of mortgage lending in the first half of 2020 matching the same period last year despite being hampered by the coronavirus pandemic.
The lender also saw mortgage applications return to pre-lockdown levels by the end of June following a sharp dip after the introduction of lockdown and social distancing measures.
For the first time since opening to the broker market in 2016 more than half of HSBC’s mortgage lending was conducted through advisers.
HSBC and Santander have both asked their mortgage underwriters to work weekends as pent up demand and the stamp duty holiday drive up business volumes.
Mortgage network Primis, which has a 9.2 per cent share of the mortgage completions market, reported that July was its strongest month for applications this year. Applications are 20 per cent up on the same period last year, and 16 per cent ahead of June.
Brokers thanked the banks over LinkedIn for continuing to underwrite applications over the weekends.
TSB meanwhile, has been praised by brokers for regular updates about its service levels.
David Baker, managing director of Lift Mortgages, said: “We get an update whenever TSB is changing the length of time it will take to respond to new applications. If service standards are going to change, we would rather banks be honest about it so this is appreciated.”
Michelle Andrews, head of buying a home for HSBC UK, said: “We take enormous pride in our service to brokers and customers and we have worked hard to support the housing market during this uncertain time.
“There has been high demand for our products as one of a smaller number of lenders operating in the higher loan to value space since Covid-19, as well as supporting our customers who need us through payment holidays.”
HSBC said it had focused on developing a new working approach over the last two years which now means underwriting can be carried out seven days a week.
“Since the pandemic hit, we have been supported by our talented colleagues in the business. So if you receive an offer at the weekend from us- it’s true- we are working to help our customers during this difficult time,” the lender added.
Santander said its underwriters had been offered the opportunity for weekend overtime as they had done in the past when business needs arose.
The lender also saw mortgage applications return to pre-lockdown levels by the end of June following a sharp dip after the introduction of lockdown and social distancing measures.
For the first time since opening to the broker market in 2016 more than half of HSBC’s mortgage lending was conducted through advisers.
The lender has been one of the few to continue offering mortgages at 90 per cent loan to value since the introduction of social distancing measures.
In presenting its interim results for January to June, the lender said it had “strong momentum” in the UK mortgage operation.
HSBC granted mortgage payment holidays to 65,000 customers during the pandemic, accounting for around 10 per cent of its UK mortgage borrowers.
The lender added it has around three per cent market share of all mortgage repayment holidays, compared to an overall mortgage market share of 6.9 per cent.
However, it has seen some increase in arrears with 0.23 per cent of its UK loans recorded as impaired by the end of June, a slight increase from the long-term average of 0.16 per cent.
Net interest margin in the UK fell 33 basis points to 1.68 per cent from 2.01 per cent and the end of March.
Profits down, loan losses up
Overall the bank reported a sharp fall in revenue and profits and revealed it will be accelerating the change programme announced in February that will include 35,000 job losses around the world.
First half performance was impacted by the Covid-19 pandemic, falling interest rates, increased geopolitical risk and heightened levels of market volatility.
Credit impairments from bad loans also increased by approximately £4.63bn ($5.7bn) to £5.61bn ($6.9bn).
And the lender warned these loan losses could increase to between £6.5bn ($8bn) and £10.6bn ($13bn) for the whole year, although the range was highly uncertain due to the volatile environment.
As a result, pre-tax profit was down 65 per cent to approximately £3.5bn ($4.3bn).
For personal lending customers, HSBC granted more than 700,000 payment holidays on loans, credit cards and mortgages, providing more than £22bn ($27bn) in customer relief in the first half of the year.
Diversity
In the results statement, group chief executive Noel Quinn pledged the bank would work to improve the diversity of its workforce.
In May, it launched a new global ethnicity inclusion programme to better enable careers and career progression for colleagues from ethnic minorities, and in July it made a series of commitments to address feedback from Black colleagues.
Quinn said the lender wanted to be “judged by our actions, not our words”.
“We will therefore provide more information about the ethnicity of our workforce in our annual reporting in February, so that our stakeholders can hold us accountable.”
Most demanding period
Quinn noted that this had been one of the most demanding periods he could remember but praised the efforts of the staff while juggling personal and professional priorities and adapting to new and unfamiliar ways of working.
“We maintained a high level of business continuity with 85 per cent of colleagues equipped to work from home, all of our customer contact centres fully operational, and between 70 per cent and 90 per cent of our branches open for business in the first half,” he said.
Quinn added: “Now that many governments have become better accustomed to managing the ebb and flow of the pandemic, we intend to accelerate implementation of the plans we announced in February.
“At the same time, our operating environment has changed significantly since the start of the year.”
