At 90 per cent LTV the two-year fix that carries a £999 fee has been reduced by 0.10 per cent to 3.14 per cent. The fee-saver option has been cut to 3.34 per cent.
Additional rate cuts include:
• two-year fix with £999 fee at 60 per cent LTV down 0.05 per cent to 1.14 per cent.
• five-year fix fee saver at 60 per cent LTV down 0.05 per cent to 1.64 per cent.
• two-year fix fee saver at 75 per cent LTV cut by 0.10 per cent to 1.79 per cent.
HSBC UK head of buying a home Michelle Andrews said: “Supporting the UK housing market can take many forms.
“Last year we continued lending at 90 per cent LTVs during very challenging times, worked hard to work within lockdown rules to continue to value properties in a timely way and continued to on-board broker partners to help give more people access to our products.”
In yesterday’s Budget, chancellor Rishi Sunak unveiled a mortgage guarantee scheme that will be backed by the government to encourage banks to lend at 95 per cent LTV again.
HSBC, Santander, Barclays, NatWest and Lloyds Banking Group have all signed up to the initiative which is expected to come into force in mid-April. Virgin Money is expected to join in May.
The scheme will be open to home buyers with a five per cent deposit, not just first-time buyers, for properties worth up to £600,000. It has been largely modelled on the previous Help to Buy scheme launched in 2013 to help lenders transition back in to the market, and is open to second hand properties not just new-build.
Sunak confirmed the UK’s biggest banks are poised to lend on the scheme from mid-April, include Lloyds, NatWest, Santander, Barclays and HSBC with Virgin Money readying to launch in May.
All mortgages will need to be repayment, not interest-only on a loan to value of between 91 to 95 per cent and are subject to the usual affordability rules. All participating lenders will also be required to offer a five-year fixed rate product as part of its guaranteed range of mortgages.
He said: “To quote the Prime Minister, we will turn generation rent into generation buy.”
HSBC’s head of buying a home, Michelle Andrews, said: “We’re delighted to once again be supporting the Government Help to Buy scheme. Here at HSBC UK we’re committed to supporting people to get on to, or move up the property ladder. This scheme will make a real difference in enabling more first-time buyers and home movers, with a minimum of 5 per cent deposit, to get the keys to their new home, and we’re excited to play our part in it.”
A Santander spokesperson said it had no product details yet but they would be available through intermediaries, branches and over the phone.
Mortgage broker, Hiten Ganatra, Visionary Finance said: “The mortgage guarantee scheme will help open up options within the second hand property market and it’s incredible that so many lenders are already on board and will be rolling out products by April.”
He added: “The key to success of the guarantee scheme will determined by the competitiveness of the mortgage rates being offered to those looking to use it.”
Stock market-listed mortgage broker firm Mortgage Advice Bureau is already listing the product on its website.
The scheme will be open for new mortgage applications from April 2021 to December 2022, reflecting the government view that the scarcity of high loan-to-value lending is primarily a response to the pandemic rather than a more structural problem.
The government will review the continuing need for the scheme towards the planned end date and has capped the bill for the scheme at £3.9bn.
Fears remain that the already hot property market with rising house prices driven up by the Stamp Duty Land Tax (SDLT) holiday, which has been extended today, could be driven ever-higher after this move.
The banks’ trade association proposed creating a new company which would oversee the functions of open banking for the long-term.
The proposed new organisation could begin operating as early as next year.
“This spells the end of big, dumb mortgage products manufactured without consideration for the end consumer,” said Dr Louise Beaumont, chair of the open finance and payments working group at TechUK.
“Mortgages will be bespoke for the individual, based on what data they choose to share with the provider. And the products will flex, as the individual’s circumstances change, again based on the flow of data,” she said.
UK Finance’s proposals follow an initial period of work by the Open Banking Implementation Entity (OBIE), which was funded by the big banks. OBIE was a response to a Competition and Markets Authority order in 2016 based on the banks not competing hard enough for customers’ business.
The nine lenders involved, known as the CMA9, were Allied Irish Banks, Bank of Ireland, Barclays, Danske, HSBC, Lloyds, Nationwide, NatWest and Santander.
Banking technology provider Yobota also welcomed the UK Finance paper — and urged the banks to address legacy system issues to support the transition.
“This is a major step forward in our journey to open finance. Mortgages, pensions and insurance products all stand to benefit from increased competition to enable consumers to make more informed decisions regarding their personal finances,” said Ammar Akhtar, chief executive at Yobota.
“We must expand the open banking model to the corners of the market that continue to be riddled with inefficiencies,” he said.
“I hope to see more emphasis on helping financial services companies bring their underlying technology into the modern era. Without modern core systems, the industry will be stuck building layers of apps on top of existing legacy systems,” Akhtar added.
Fitness apps and online retail data
The industry’s journey to open banking will likely move through the stage of open finance, then open data.
Open finance is where data is sourced from financial organisations like insurers. Open data brings in information from a wider range of sources such as fitness apps or online retailers.
“Open banking is a world leading innovation with huge potential to make our financial lives much safer and more convenient,” said a spokesperson for UK Finance.
“It provides a secure way for financial information to be shared across different finance providers with customers’ consent. This can enable services such as account aggregation, where customers can see all their accounts with different providers in one place, as well as the ability to make direct payments through a third party provider from a bank or building society account.
“Open banking can also facilitate services that help customers shop around for banking and credit services, or to support lending decisions through credit analysis,” the spokesperson said.
The move is expected to result in better outcomes for customers specifically by stimulating competition.
“Open banking has a rich and valuable future, building from humble beginnings in the banking sphere to open finance and through to the rich, sunlit uplands of open data. This means an ever-richer suite of data to pull into ever-more valuable services — hyper-personalised, predictive and pre-emptive services,” said Dr Beaumont.
“It’s time to to unleash your imagination and think about the data you need to create genuinely valuable services and to leave lumpen, inflexible products behind,” she said.
New enabling organisation
The UK Finance paper, Open bank futures: blueprint and transition plan, lays out ideas for structuring and funding the new enabling organisation and describes the potential scope of its activity.
Its proposed overall purpose is, “to help consumers, small business and corporates to benefit from an efficient, safe and reliable open data and payments market, and to provide a platform to support financial institutions to meet regulatory requirements.”
The paper sets out the proposed functions of new entity, such as holding and maintaining technical standards, providing core services such as a help desk and directory, enabling regulatory compliance, acting as an effective point of escalation and resolution, and advocating for open data and payments.
The organisation’s key performance indicators are outlined too.
They are: widespread adoption of open data and payments propositions, highly secure and reliable provision of services, keeping the UK at the forefront of innovation in open application programming interface (API) propositions, ensuring those in vulnerable situations are able to experience equal benefits of open data and payments propositions, and preventing poor customer outcomes.
The 14 per cent increase in lending was in marked contrast to the overall mortgage market which shrank by 10 per cent to £241bn, and this gave HSBC a 10.3 per cent share, up from 8.1 per cent in 2019.
It takes HSBC above Barclays to become the fifth largest lender in the UK, after Barclays’ lending dipped in line with the pandemic-hit market last year.
HSBC also revealed 60 per cent of its lending was completed by advisers, the first time since launching into the broker market in 2016 that more than half its lending was done through the channel.
The bank’s new originations had an average loan to value (LTV) of 70 per cent.
It was one of the few able to continue lending at the 90 per cent loan to value (LTV) level during the first lockdown but eventually had to pull back to 85 per cent LTV citing demand and wanting to preserve service levels.
Its overall mortgage book also ticked up to £110.7bn from £108.1bn, with around 26 per cent of this in Greater London and an average LTV of 51 per cent.
It has £19.4bn worth of interest-only mortgages, £3.3bn on its standard variable rate and a buy-to-let book of £2.8bn.
Payment holidays up to date
In the final three months of 2020, HSBC reported 0.19 per cent of mortgages were 90 days overdue, down from 0.23 per cent in June at the height of the pandemic but up slightly from 0.16 per cent pre-pandemic.
Within its UK operation it noted a £245m increase (US $335m) in loan losses ticking up to £366m ($499m) which was driven by deterioration in forward economic outlook due to market uncertainty.
“In the UK, 97 per cent of balances that have exited payment holiday agreements are up to date with their payments,” it added.
Profits dip, loan losses rise
Overall, HSBC’s profit after tax was down 30 per cent to $6.1bn (£5.37bn) and reported profit before tax down was 34 per cent to $8.8bn (£6.45bn) from higher expected credit losses and other credit impairment charges and lower revenue.
However, it said this was partly offset by a fall in operating expenses.
In total it reported an increase in expected credit losses (ECL) up $6.1bn (£5.37bn) to $8.8bn (£6.45bn), mainly due to the impact of the Covid-19 outbreak and the forward economic outlook.
The bank’s net interest margin of 1.32 per cent in 2020 was down 26 basis points from 2019, due to the impact of lower global interest rates.
Group chief executive Noel Quinn said: “The pandemic inevitably affected our 2020 financial performance.
“The shutdown of much of the global economy in the first half of the year caused a large rise in expected credit losses, and cuts in central bank interest rates reduced revenue in rate-sensitive business lines.
“We responded by accelerating the transformation of the group, further reducing our operating costs and moving our focus from interest rate sensitive business lines towards fee-generating businesses.
“Our expected credit losses stabilised in the second half of the year in line with the changed economic outlook, but the revenue environment remained muted.”
Quinn added: “We have had a good start to 2021, and we are cautiously optimistic for the year ahead.”
In its 12th year, Mortgage Vision is running as a series of eight 45-minute events, packed with industry insights and presented by numerous expert industry leaders.
The agenda covers a range of topics including adverse credit, navigating ever-changing policies and criteria, self-employed and general insurance and the events run from the 1 to the 25 March.
Each masterclass will start at 11am on its allotted day and focus on a different topic with every class offering up 0.5 hours of continual professional development (CPD), with delegates able to quiz presenters through a live Q&A.
Neil Wyatt, sales and marketing director at Mortgage Brain, (pictured) said: “Our Mortgage Vision event has been going strong for more than a decade, and provides advisers with an unparalleled range of diverse and insightful presentations.”
He added: “Advisers have a huge amount to keep on top of, from the challenges of securing mortgages for borrowers with adverse credit to helping those who are self-employed, and Mortgage Vision is a brilliant way to inform and educate advisers on the often-changing mortgage landscape.”
Sign up for the events here.
Event schedule
1 March Mortgage Brain Navigating the ever-changing landscape of lender policy, product availability and client affordability
4 March Uinsure Reimagined insurance technology that makes giving GI advice a no brainer
8 March HSBC UK High LTV insight: let’s talk about all things 90%
11 March Pepper Money Adverse mortgage insight: An in-depth look at adverse credit and its impact on mortgage customers
15 March Mortgage Brain Simplifying your mortgage submissions to multiple lenders from a single login
18 March Leeds Building Society New Build and affordable housing: what’s coming down the track?
22 March HSBC UK Self-employed insight: let’s talk about all things self-employed
25 March Skipton Building Society for Intermediaries Underwriting and credit risk: behind the scenes
It added 126 firms on to its panel since the start of the pandemic.
The most recent additions of Andrew Nolan Mortgage, John Earnshaw Independent Financial Advisers and Salus Mortgage Solutions, take the total to 302.
The lender has been steadily rolling out across the broker market since relaunching to advisers in 2015 and last summer reported having 93 per cent of the adviser market by value on its books.
HSBC UK head of intermediary mortgages Chris Pearson (pictured) said: “I am extremely proud to reach this milestone, especially at such a challenging time.
“We have maintained a high level of support to our broker partners throughout these testing times and stand ready to support them going forward.
“We have accelerated our broker onboarding and have added 126 more during the pandemic, which is a fantastic achievement. We hope to continue at this rapid pace and expect to add significantly more broker firms to our panel, helping more people onto or up the property ladder.”
Under the lender’s altered policy on variable pay the most recent payment must have been received in 2021.
Quarterly, half-yearly or annual bonus payments can also be used to support mortgage affordability.
Following the rate cuts, HSBC now offers a 90 per cent LTV two-year fix if 3.44 per cent fee-free or 3.24 per cent with a £999 fee.
Five-year equivalents are available at 3.44 per cent or 3.64 per cent fee-free.
At 85 per cent LTV, the lender offers a two-year fix of 2.54 per cent with £999 fee or fee-free at 2.84 per cent.
Five-year equivalents are priced at 2.84 per cent or 3.14 per cent fee-free.
Michelle Andrews, HSBC UK’s head of buying a home (pictured), said: “We are all looking forward to normality returning, and the inclusion of overtime, commission and bonuses to support a mortgage application is one bit of normality that will be welcomed by many looking to move onto or up the property ladder.”
In an internal move, Wolfenden moves from his role as head of finance and strategy for HSBC UK’s wealth and personal banking division, with effect from 1 March, replacing Tracie Pearce, who is leaving the bank after six years’ service.
Tom will assume responsibility for all retail products, including the teams that look after banking, buying a home and customer experience, in addition to strategy and risk and underwriting.
Stuart Haire, HSBC UK’s head of wealth and personal banking, said: “Tom has a huge amount of experience in the bank and knows our strategy, products and capabilities like the back of his hand. I would like to sincerely thank Tracie Pearce for her time with the bank, both as head of mortgages and latterly heading up retail banking. She has made a real difference to this bank and leaves big shoes to fill.”
Wolfenden said: “Whether it is providing appropriate support with credit products, enabling products digitally, or helping the most vulnerable in our society, more than ever, now is the time for banks to step up to the mark to deliver for customers. I will do my utmost to ensure we continue to do just that.”
He is a chartered accountant and has spent over 10 years at HSBC starting as head of insurance asset, liability and capital management before moving to become head of finance for the Middle East North Africa region and subsequently chief finance officer for HSBC insurance.
Wolfenden grew up in Yorkshire and attained a BA in Econometrics from the University of Sheffield. Tom is married with four children and enjoys adventure and travel, including trekking where he has climbed to Everest Base Camp, Mount Kenya and Kilimanjaro. Tom also enjoys running and cycling, completing the London Marathon, a 1000km bike trip across Thailand and most recently competing in triathlons.
The lender has reduced the cost of two-year standard fixes and two-year fee saver fixes, and the five-year equivalent ranges.
Rates on the two-year term tracker have also reduced at selected loan to values (LTV).
It means the lender now offers a five-year fix of 1.64 per cent at 75 per cent LTV with a £999 fee, as well as a 90 per cent LTV two-year fee-free fix of 3.59 per cent.
And a two-year tracker at 75 per cent LTV is available at 1.69 per cent.
In total 30 mortgages have had rates reduced.
HSBC UK’s head of buying a home Michelle Andrews (pictured) said: “Despite the obvious challenges, the housing and mortgage markets are quite lively.
“This rate cut by us, with 11 mortgages reduced by 0.30 per cent or 0.40 per cent, including those at 90 per cent LTV, means getting onto or up the property ladder with HSBC UK, has become more affordable.”
