HSBC, Bank of Ireland…and Worcester Warriors RFC!

Sunday, 13th April 2008 12:15 - by Resident IFA

The story of the week for me had to be HSBC’s offer to match the existing interest rate of borrowers coming to the end of fixed interest rate mortgage products. This starts from tomorrow (Monday 14th April) and lasts for five weeks. The products offered will be fixed for 2 years. Hat’s off to HSBC for seeing an opportunity to offer this, being able to as they don’t rely as heavily as other lenders on borrowing from the money markets. The three potential caveats behind the deal are that the minimum equity left in a borrower’s home to re-mortgage has to be 20%, HSBC will charge a fairly hefty fee for the privilege of the new product, and the maximum loan is £250,000. To see how potentially good an offer this is, I looked on another major lender’s website (Nationwide), finding that their 2-year fixed rate re-mortgage deal for a lender willing to pay £499 and with 25% equity in their home is a (relatively) whopping 6.3%! HSBC estimate that three-quarters of the new customers who take advantage of this will pay a product fee of £999 or less. Many will view this as a better course of action than a potential 1-1.5% mortgage rate increase from taking a new product with their existing lender or looking to other borrowers in the market. As always in my Blogs, I urge you to seek independent financial advice in seeking the best and most appropriate mortgage product for your personal circumstances. In my Blog of April 3rd (http://lse.co.uk/personal-finance-blog.asp?code=RP314653J&blog=mortgage_madness), I mentioned how crazy the coal-face of the mortgage market is at present. A further good example of this came on Thursday as I was driving on a 7-hour round trip to Worcester on business. A colleague received an e-mail from Bank of Ireland en-route, informing us that they were withdrawing their products at 5pm. Yes, that’s 5pm that day, not the next day or the following Monday…more than a few hours notice is a thing of the past in the mortgage market! Anyway, I managed to wander round Worcester Warriors Rugby stadium, interrupting the staff canteen and making a general (unintentional) nuisance of myself! A very kind lady rescued me and took me to the Receptionist, who kindly gave up her internet connection for 10 minutes to this apologetic stranger. I submitted the application and saved the day, but have to question the state of the mortgage market based on this anarchic snapshot. My sincere thanks go to the aforementioned kind ladies at WRFC for their help…and thanks from my Client too! Until next time…