The sub-one per cent deals are two-year tracker products at 60 per cent loan to value (LTV) which have seen a rate reduction of 0.15 per cent. They are now priced at 0.99 per cent, which is 0.74 per cent plus the current base rate of 0.25 per cent.
These are available to standard residential existing first-time and homeowner borrowers who are remortgaging, switching and taking out further advances.
The products have a £999 fee.
Also at 60 per cent LTV, its five-year fixed remortgage with a £999 fee has been reduced by 0.10 per cent to 1.44 per cent and its five-year fixed fee-free remortgage has been reduced by the same amount to 1.59 per cent.
At 85 per cent LTV, its five-year fixed purchase and first-time buyer product with a £999 fee has been reduced by 0.10 per cent to 1.79 per cent, and the 90 per cent LTV equivalent has received a similar cut to 2.19 per cent.
Reductions of up to 0.10 per cent have also been made to its buy-to-let range.
Michelle Andrews, HSBC UK’s head of buying a home, said: “We are following rate reductions just before Christmas with a further rate refresh, where we are reducing our fixed rate mortgages by up to 0.1 per cent, whilst our more flexible tracker deals are also being reduced across the range.
“By providing a sub-one per cent option for customers with a higher amount of equity and reducing higher LTV rates for house purchases, we are offering those wishing to refinance their existing home, or seeking their first or next move on the property ladder, access to highly competitive rates with the option to choose between more flexible deals or secure longer term payment security.”
Yorkshire Building Society maintains SVR
Yorkshire Building Society has decided to hold its standard variable rate (SVR) despite other lenders increasing the rate in light of the base rate change.
Its SVR is currently 4.49 per cent.
The mutual will also add 0.10 per cent to its variable rate savings accounts.
Chris Irwin, director of savings at Yorkshire Building Society, said: “It has been a tough few years for savers so we’re delighted to be able increase our savings products at the same time as protecting our borrowers from the increase.
“With no external shareholders to satisfy we have protected savers as far as possible during the extended period of a record low bank rate, maintaining an average interest rate on our accounts which has been consistently higher than the market average.”
Irwin added: “It is also pleasing that our robust financial position allows us to protect repayments for some of our borrowers by not increasing our SVR.”
All changes will come into force on 1 February.
According to the Sunday Telegraph, this will be to reflect rising energy bills caused by the increased cost of wholesale gas.
Energy prices are set to surge this year when Ofgem’s price cap rises in April from its current level of £1,277 to about £1,877. This could potentially add hundreds of pounds to household expenses.
The government has been urged to assist vulnerable households to pay for rising bills and Ofgem is currently consulting on how it calculates the energy cap. Ofgem will make its decision early next month.
HSBC refused to comment on possible affordability changes when contacted by Mortgage Solutions.
Sensible but harmful approach
Considering rising energy bills when calculating mortgage affordability is a responsible move but could have negative consequences, industry figures have said.
Colin Bell, COO and co-founder of Perenna, said: “It’s sensible that big lenders like HSBC are considering more stringent affordability tests in the context of increasing energy costs. However, this could have harmful consequences on the most vulnerable customers’ opportunity to refinance.
“In the worst possible scenario, we could see an increase in mortgage prisoners who end up overpaying for their mortgage while at the same time facing higher energy prices. Lenders will need to factor in higher energy prices, rising inflation and rising interest rates when looking at a consumers’ affordability, which will make mortgage deals harder to secure in 2022 compared to 2021.”
Katie Brain, insight analyst – banking at Defaqto, added: “Lenders will be reviewing their underwriting policies to ensure they are lending responsibly, particularly with inflation at a high level, so we may start to see more restrictions to how much they are willing to lend.”
The FCA found that there were three key failures in the bank’s transaction monitoring system over a period of eight years from 2010 to 2018.
The three key failures were not considering if scenarios used to identify indicators of money laundering or terrorist financing covered relevant risks until 2014, and only carrying out timely risk assessment for new scenarios after 2016.
HSBC also failed to appropriately test, and update system parameters used to identify whether transactions was indicative of potentially suspicious activity.
The bank also failed to check the accuracy and completeness of data going into and stored in its monitoring system.
HSBC did not dispute the findings and agreed to settle, therefore securing a 30 per cent discount on the fine.
It has since undergone a large-scale remediation programme into its anti-money laundering processes, overseen by the regulator.
Mark Steward, executive director of enforcement and market oversight at the FCA, said: “HSBC’s transaction monitoring systems were not effective for a prolonged period despite the issue being highlighted on numerous occasions.
“These failings are unacceptable and exposed the bank and community to avoidable risks, especially as the remediation took such a long time. HSBC continued their remediation to address these weaknesses after the relevant period.”
A HSBC spokesperson said: “We are pleased to resolve this matter, which relates to HSBC’s legacy anti-money laundering systems and controls in the UK. As is well known, in 2012, HSBC initiated a large-scale remediation of its financial crime control capabilities. More recently, as the FCA recognised, HSBC has made significant investments in new and market-leading technologies that go beyond the traditional approach to transaction monitoring. HSBC is deeply committed to combatting financial crime and protecting the integrity of the global financial system.”
The facility will give the lender flexibility to grow the number of SMEs it can support with its asset finance product.
Ultimate Finance has provided over £45m of asset finance funding to businesses in 2021, which is up 20 per cent on 2020.
It has also increased the maximum facility size from £1m to £1.5m.
Neil McMyn, chief financial officer at Ultimate Finance, said: “We’ve enjoyed a strong relationship with HSBC and extending our asset finance wholesale funding facility through to 2024 puts us in an enviable position in our market, to drive growth in our loan book through increased lending to SMEs going into 2022.”
Oke Uwakwe, director of structured finance at HSBC, added: “HSBC is pleased to be able to extend this funding facility to allow Ultimate Finance to continue supporting UK SMEs through the economic cycle.”
Jeremy Duncombe (pictured), director of mortgage distribution at Yorkshire Building Society and managing director of Accord Mortgages, has been elected as chair.
He stepped down from vice chair and took on the chair role following the departure of Louisa Sedgwick, who was the first woman to be elected as chairman of IMLA.
Duncombe was previously director of mortgages at Legal & General for around five years and held senior roles at Santander UK and St James’s Place.
Kevin Purvey, director of mortgage distribution at Coventry Building Society, has been elected as vice chair.
He has worked with IMLA for a decade, having served as chairman between 2015 and 2016 and been a director since 2012. He has also worked at Cheltenham & Gloucester and Bank of Ireland.
Richard Beardshaw, who is HSBC’s head of sales for mortgage intermediaries, takes on the role of a director. He was previously IMLA chair from 2019 to 2021, and has held senior roles at Countrywide, Lehman Brothers and Platform Home Loans.
Sedgwick, who is deputy managing director at Hampshire Trust Bank, has also taken on a director role. She has held senior roles at Vida Home Loans and Leeds Building Society
Tracy Simpson, head of lending at Cambridge Building Society, also takes on the role of director for the first time. She has worked at Cambridge Building Society for around 12 years and prior to that spent nearly three decades at Barclays.
The four co-opted directors are: Andy Dean, head of intermediary support and new build at Nationwide, Craig McKinlay, new business director at Kensington Mortgages, Adrian Moloney, group sales director at One Savings Bank, and Steve Seal, chief executive at Bluestone Mortgages.
Both McKinlay and Seal are joining the management committee for the first time.
Kate Davies, executive director at IMLA, said: “This is IMLA’s largest management committee to date and I would like to congratulate all those who have been elected, especially Jeremy, who has done a great job as chair after stepping in on an interim basis in March 2021.
“IMLA now consists of 46 Full and 13 Associate members, and the new committee is looking forward to raising our profile, representing the sector and delivering benefits for all our members in 2022. It’s good to see a more diverse committee for 2022, with Louisa and Tracy on board, and the mix of new and experienced members should give us an excellent base on which to build in the coming year.”
In its third quarter results, in the nine months of the year it had reported gross mortgage lending overall of £16.7bn ($23bn), driven by lending the UK and Hong Kong. It did not specify a breakdown between the two regions.
Across its personal banking business, net interest income fell by £872m ($1.2bn) due to narrower margins amid lower global interest rates, but the bank said this was offset by the higher mortgage lending in these the UK and Hong Kong.
In the UK, the group’s profit before tax increased by £727m ($1bn) to £1.09bn ($1.5bn) compared to Q3 last year. This was attributed to lower reported credit impairment charges.
It added that in the UK, its Q3 revenue was up by six per cent year-on-year and up two per cent quarter-on-quarter.
Overall, the group’s profit before tax grew by 76 per cent to £3.9bn ($5.4bn).
HSBC said its revenue outlook was “becoming more positive” pointing to fee growth across many businesses and the stabilistation of net interest income, which it said was expected to rise in the coming quarters due to lending growth and policy rate rises.
The bank also reported strong fee growth during the period, with fees up by a quarter annually and 13 per cent higher quarter-on-quarter.
Its results also showed that its year-to-date gross mortgage market share in the UK was 8.6 per cent, up from 7.4 per cent in June. This was a contraction on the 13 per cent share of the market it held during the same period last year.
Noel Quinn, group chief executive, said: “We had a good third-quarter performance, with strong growth in profits supported by additional credit provision releases. Our strategy remains on track, with good delivery in all areas. This was reflected in more consistent top-line growth, robust lending pipelines across our businesses, and rising trade and mortgage balances.
“While we retain a cautious outlook on the external risk environment, we believe that the lows of recent quarters are behind us. This confidence, together with our strong capital position, enables us to announce a share buyback of up to $2bn, which we expect to commence shortly.”
Changes apply to mortgages at 80 to 95 per cent loan to value (LTV).
Across purchase products, this includes the two-year fixed at 85 per cent LTV with a £999 fee. This has been reduced by 0.10 per cent to 1.39 per cent.
Receiving the same reduction, the fee-free two-year fixed deals at both 90 and 95 per cent LTV now have rates of 1.99 per cent and 2.79 per cent respectively.
The five-year fixed rate product at 80 per cent LTV with no fee has been cut from 1.99 per cent to 1.89 per cent, while the £999 fee paying alternative has been reduced from 1.74 per cent to 1.69 per cent.
HSBC’s two-year fixed remortgage at 80 per cent LTV with a £999 fee has been cut by 0.15 per cent to 1.39 per cent. The equivalent at 85 per cent LTV has been reduced to 1.99 per cent from 2.09 per cent.
Michelle Andrews, HSBC UK’s head of buying a home, said: “These changes really put a focus on higher LTV customers, with our new lower rates available to those looking to purchase, remortgage or switch rates.
“By cutting the cost of borrowing on over 30 mortgages at 80 per cent LTV and higher, across two and five-year fixed rate deals, we are offering some of the lowest rates currently available, whether coming to us via a broker, or direct.”
