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Mortgage lenders were under pressure last week following the release of HBOS’ March house price index.

The index showed a monthly fall of 2.5% against an expected decline of 0.3%.

The fact that the price drop was far greater than forecast does not augur well for the residential property market.

Shares in Alliance & Leicester, HBOS and Bradford & Bingley all suffered as a result.

HSBC announced that it would offer two-year mortgage extensions to home owners whose fixed rate deals with other banks are ending this year, leaving them facing large increases in their rates.

Given the group’s strong capital position in that it does not need to borrow from the money markets, it’s a sensible strategy to try to increase its market share.

Meanwhile, rumours were rife about JC Flowers’ approach for Friends Provident. It was reported that its bid would be increased from 150p to between 155p and 160p.

But it now seems that a bid of 160p would be the minimum Friends Provident would be prepared to consider.

John Goodall is a private client research analyst at stock broker WH Ireland.


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