HSBC has revealed it is the only top ten mortgage lender not to increase its mortgage margin over Bank of England base rate since July 2000.
Since HSBC introduced its promise never to exceed base rate by more than 1%it has cut the margin it makes over base rate by 43% – saving its customers 260m extra interest.
Last year HSBC revealed that eight out of the UKs 10 biggest mortgage lenders had increased their margins by up to 24% over base rate between July 2000 and March 2004. Following the last cut in base rate, with three top 10 lenders choosing not to pass the full 0.25% reduction to their mortgage borrowers, these margins are now up to 27%. HSBC calculates that overall this has resulted in the mortgage customers of these lenders paying 2.3bn more than they would have done if margins had simply mirrored movements in base rate.
Carina Kemp, head of mortgages at HSBC, says: “Within seconds of the last cut in base rate we announced that we would pass the full 0.25% reduction on to our borrowers, reducing our variable rate to 5.50%. This is lower than the SVR of any other top 10 mortgage lender and thanks to our price promise, we can guarantee that our home buyer rate will never exceed base rate by more than 1%.
“Meanwhile, too many mortgage lenders use headline-grabbing fixed and discounted rates to attract customers while making loyal, existing customers subsidise these deals, typically through high SVRs. By contrast HSBC offers value to all its customers.”