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Mortgages -
HSBC Offers Extensions On Fixed-Rate Mortgages - 09/04/2008
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HSBC Holdings Plc is offering two-year extensions on fixed-rate mortgages sold by rivals who are pulling back or raising rates on mortgages in the UK.
In a statement the bank said it will stretch out fixed rates on rival’s loans planned to change to variable rates before June 30.
The promotion will start on April 14 and continue for five weeks before it ends. It comes with fees and requires borrowers to have equity of at least 20 per cent of a home’s value.
A statement from the bank said borrowers facing the shock of impending higher repayments at the end of their fixed-rate mortgage period could switch to HSBC, adding that its deal could match their old rate. The deal, HSBC said, has been available to its customers since February 1.
The bank had said in a filing that its customer deposits exceeded its outstanding loans by 12 per cent last year.
An analyst at Collins Stewart, Alex Potter, said HSBC has a surplus of funding, largely because of its Far-Eastern businesses that are extremely liquid.
He added that the bank is now clearly ready to forcefully deploy its strong deposit-gathering franchise.
HSBC said it will be charging fees of up to £4,999 to customers borrowing £250,000 at a rate of 4.54 per cent. And that 72 per cent of customers will pay £999 or less, according to its estimates.
1.4 millions home loans are to reset this year and will force borrowers to shift to variable rates, the Council of Mortgage Lenders has estimated. The HSBC said it will extend loans with fixed rates as low as 4.5 per cent.
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