Bob Hunt: There can be no denying that HSBC’s Rate Matcher range will offer some borrowers products and rates they are not able to obtain elsewhere, given the prevailing turbulence in the lending market.
But brokers should not be too concerned about this being a nail in their coffin because of the small print that accompanies the range.
The terms and conditions associated with the Rate Mat-cher products mean that only a limited number of borrowers will be able to take out the deals.
The potential fees that will be applied, the cap of £250,000 on the maximum loan size and the fact that the promotion is only available for five weeks mean the range is unlikely to appeal to all borrowers.
We know that some 1.4 million borrowers are due to come off discount or fixed rate deals this year and it’s obvious that HSBC is not going to soak up all these potential customers, especially as it does not distribute through brokers.
But any lender looking to help borrowers coming off such deals by reducing the payment shock associated with higher rates should perhaps consider such initiatives.
It is not yet clear whether offering the Rate Matcher range signals a rethink by HSBC in relation to its distribution – in particular, whether it is considering using the broker channel.
Given the strength of HSBC’s balance sheet and its stature as a financial institution, it would be interesting to see it broaden its presence in the lending market by using the services of brokers.
If it did this, HSBC could have a substantial and positive effect not only on borrowers looking for competitive mortgages in these tough times but also on its own lending figures and market share.
Paul Fisher: As a result of the terms and conditions HSBC has att-ached to its Rate Matcher products, the initiative is unlikely to have a substantial negative effect on brokers.
There are a number of restrictions regarding qualification for the deals including the fact that new customers must pay up to a 20% fee, the minimum rate is 4.54% and the maximum loan size is £250,000.
But there is a market for this sort of initiative – at first glance, borrowers who conduct their own research and approach product providers directly will probably see it as competitive.
The important point is that they are likely to pay a high price for their supposedly competitive products, especially if they have unfavourable credit histories or are currently on low rates.
Rate Matcher terms also state that if the fee required to maintain a potential customer’s rate exceeds £4,999, HSBC will not offer the deal. Obviously, the lower the rate HSBC has to match the higher the fee will be. But that said, the lender gives an example of a rate of 4.89% with a fee of £1,119 – a competitive combination.
Lenders like to make their innovative deals seem particularly attractive to garner headlines but sometimes the small print reveals that few borrowers are able to access the products.
The vast majority of brokers have no need to be concerned about the Rate Matcher range as even if they refer customers to HSBC on grounds of best advice, they may find the fees make the products uncompetitive.
Given that most customers still object to high fees, the effect of this range on the broker sector is likely to be limited. It’s more likely that the deals will only be attractive to existing customers.