HSBC Match rates offer

[Legal Beagles]

HSBC bucked the squeeze in the mortgage market today by offering to match homeowners' existing fixed-rate deals.


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[Legal Beagles]

HSBC offer to match mortgage holders' existing fixed rate deals as Brown banks on int

HSBC last night bucked the trend in the mortgage market with an audacious offer to match the interest rate of any borrower coming off-fixed rate deals. The offer will apply to both HSBC customers and those with mortgages elsewhere and effectively shields borrowers from the recent increases in the cost of a home loan

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[argentarius]

Re: Short-changed: How banks are cashing in on the credit crunch by squeezing savers

Millions of homeowners and savers are being short-changed as banks fail to pass on the benefits of interest rate cuts. A Daily Mail analysis of deals offered by lending giants shows they are seeking to cover losses, protect profits and retain bonuses by exploiting loyal customers

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This article contains the usual Daily Mail exaggeration.

For example, they say "On July 31, 2007, the average standard variable rate (SVR), according to the Bank of England, was 7.44%. At the end of February it was 7.49%, even though the Bank of England had cut base rate by 0.5% in the intervening period."

Whilst this is superficially factually true, it's completely misleading.

The BBR increase on 05/07/07 (and lenders generally passed this on on 01/08/07); the BBR fell on 07/02/08 (and lenders generally passed this on on 01/03/08).

By selecting average SVRs at 31/07/07 (before the rate increase was passed on) and 29/02/08 (before the rate decrease was passed on), it appears that lenders' margins have been increased by 0.55%; in fact they have only increased by 0.05% - not the big deal that is being made out by the Mail.

That's not to negate some of the other points made in the article. Obviously lenders have been increasing the rates on their mortgage products and (to a far lesser extent) reducing them on their savings products. But the pricing a year or two ago was completely unsustainable - competition was leading lenders to sell mortgages on which they made no money at all. It took the credit crunch to make lenders re-assess what they were in business to achieve - not (IMHO) to go for market share at the expense of making a decent margin, but to make some money for their shareholders.

[argentarius]

Re: HSBC offer to match mortgage holders' existing fixed rate deals as Brown banks on

HSBC last night bucked the trend in the mortgage market with an audacious offer to match the interest rate of any borrower coming off fixed-rate deals. The offer will apply to both HSBC customers and those with mortgages elsewhere and effectively shields borrowers from the recent increases in the cost of a home loan

More...

"Shielding borrowers from the recent increases" ... er, not quite. Borrowers wanting to remortgage £250,000, on which they were paying 4.54%, will have to pay a £4,099 fee making the equivalent rate over two years 5.36%.

Now, if they mean "keeping the borrowers' payments nearly the same, ignoring the fact they've lost £4k of their equity", that'd be more accurate.

(The payments won't be actually the same, assuming the fee is added to the loan).