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HSBC does it again

HSBC has once again claimed that it “accepts around nine in 10 of all customers who apply for a mortgage” – ha, ha, don’t make me laugh.

Actually maybe that’s a little disingenuous of me as to be fair, at least it is giving the impression of supporting the average mortgage borrower and its rates have been consistently attractive.

However, in making this comment while trying to put the proverbial boot into mortgage brokers who it clearly sees as an irritant, it is opening itself up to closer inspection.

If nine out of 10 people who go through its door get a mortgage offer that is brilliant.

If this is the case though I would urge everyone who needs a mortgage – first-time buyers, foreign nationals, the self-employed, those at high LTVs, those whose income is from multiple sources, who need a guarantor, who may have a little credit blip, who need to stretch beyond the published 4.5 x income multiples, etc to get down to a HSBC branch pronto before the queues get too long.

I have no issue with the fact that HSBC does not deal with brokers – seriously I don’t. Of course I would love it to and I even sent it a cheeky email recently asking it for a pilot, but what I do have issue with is the fact that a first-buyer or anytime buyer for that matter can take out the biggest debt they are ever going to have without getting any advice.

I think the reality will be more like this:

“Of the people we see that come through our door for a mortgage, who, after speaking to our mortgage ‘specialist’ to confirm they fit our published mortgage criteria and can demonstrate their affordability and have a clean credit score, who we then allow to actually complete a mortgage application form, around nine out of 10 receive an offer, perhaps not the exact offer they asked for, but an offer nonetheless.”

In truth, that is still pretty good given the market at the moment, but to give a blurred message without the full explanation when criticising others, is perhaps a little off.

So, dear HSBC, what percentage of the people who walk through the door, go online or phone up wanting a mortgage actually get the mortgage offer they asked for? I personally do not believe it is 90% – sorry, I just don’t. Also, how many clients accept that offer and go on to complete?

If it is true then why do, as the wise Ben Thompson, managing director at Legal & General mortgage club, says: “…direct to consumer only mortgage products make up just 19% of all the mortgage products available in the UK and HSBC’s direct only offering represents 2% of this direct only market.”

The statement from HSBC also said that “The bank’s strategy is that it believes it is best placed to sell its own mortgages and that lender and borrower need to deal with each other during the sale process to make the best lending and borrowing decisions.”

If the lender is providing independent advice then ok, but what if the best option for the borrower is a three- year fix and the lender only has a two or a five-year?.

Even more intriguingly, Peter Dockar, head of mortgages at HSBC, says: “Mortgage customers used to rely on brokers for the best deals but this is no longer the case.”

Unfortunately this shows a misunderstanding of what brokers do. There have always been direct lenders who sometimes offer the cheapest headline rates. Then the pendulum swung to brokers because lenders needed the volume and quality they provided, but that is still not the point.

The point is that mortgage customers have always relied on brokers to obtain the right deal for their circumstances.

If it was just always about the lowest headline rate, well then you don’t need me. Don’t worry about the fees, penalties, flexibility, portability, suitability, potential lifestyle changes, timescale, deadlines, service etc.

In fact, if HSBC really offer a mortgage to nine out of 10 who walk through the door, within the required timescale to secure the property, then I humbly apologise.

Anyway, never mind that I’m off there now to remortgage my 90% interest-only loan…er, sorry, what do you mean two years full accounts?

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  • Rob Jacobs 21st October 2011 at 12:38 pm

    i have sent several clients to the HSBC as it has been the best rate, only to find my clients are back within 48hrs having been told they do not fit criteria or they require pension projections and ISA projections ( hard to get these days) to complete. The clients have very little praise and are desperate to go with the alternative option and then praise you for all the work you’ve done in the past and even pass on more recommendations. Let HSBC carry on its creating more business for my company as there trusted adviser

  • Jack Cade 20th October 2011 at 1:02 pm

    Guys, you need to get real – the broker is irreplaceable for those difficult to place cases where significant work is needed to prepare a case for lenders – some of the cases that Andrew mentioned above.

    But why should a bank, and ultimately the customer, pay you a 25 BP proc fee for finding a loan from a best buy table and filling out a couple of forms?!

    And forget the “best option for the borrower is a three- year fix and the lender only has a two or a five-year” – how many customers REALLY have this specific timetimeframe in mind!

    HSBC are filling their quota more cheaply through their branches and direct, and offering top prices. Good luck to them.

  • Adam Smith 20th October 2011 at 10:59 am

    @ Andrew Botte – You seem to spend a lot of time defending HSBC Mr Botte, maybe its time to remove those blinkers.

    The issue being addressed here is HSBC’s bold claim that they successfully produce mortgage offers for 90% of the applications that are submitted.

    If they have a cautious approach then fair enough but don’t advertise flexible underwriting as one of your main attributes!

  • Andrew Botte 19th October 2011 at 6:37 pm

    HSBC Bank have a fantastic mortgage proposition, take a cautious but proactive approach to writing business and are perfectly entitled to decide on which distribution channel is best for them and their potential customers.

    What percentage of business they convert is of no relevance or consequence to any broker so what is the point of the article?

    There will always be direct and agency channels and these will change over the years.

    If more lenders operated as per HSBC’s lending policy perhaps the banking crisis would not have cut so deep!

  • Matthew Sedgley of Independent Financial Solutions 19th October 2011 at 2:06 pm

    More explanation needed Gareth…

    …my younger brother who is a first time buyer, with a sizeable deposit and is a police officer only just about managed to get their mortgage offer after HSBC lost the file and tried passing him on to a different branch.

    HSBC had no idea why ‘we chose them’ after looking at the entire market.

    Their ‘service’ was shocking and their understanding no existant.

    Their rate was pretty good though!

  • Sean Piper 19th October 2011 at 1:07 pm

    I recently had to advise a client that an HSBC product was the most suitable for thier needs and as the client already had a relationship with HSBC I thought things would be simple for the client.

    The client tried for almost two weeks to get an appointment with an HSBC “Adviser” and when they eventually met the client was left disappointed with the service and the advice and the fact that HSBC didn’t recognise the product that I had suggested. I provided a KFI for my client who then went back to HSBC, after another considerable wait, and strangely enough they then decided that they could offer the client what he wanted. I’d strongly suggested that the client did not get into any discussions with HSBC regarding protection policies and was surprised when the client came back to me discuss the protection that HSBC had intimated that he would be required to take out.

    There is obviously no requirement to take out any policies with HSBC and the price of the recommended life cover and B&C were almost five times greater than I could have arranged elsewhere – this was on much better than a like for like basis.

    It’s time HSBC stopped blowing hot air up their own back sides, althought to be honest their poor customer service and poor ancilary offering can only do good for us brokers.

  • Phil Reading 19th October 2011 at 12:51 pm

    I know a HSBC mortgage adviser very well. She often pulls her hair out at not being able to fit a ‘good’ client to the bank’s stringent criteria. Lucky for me – I get the HSBC rejects and usually place them with another high street lender after offering independent advice. Kepp up the good work HSBC!

  • Jim Baxter 19th October 2011 at 12:45 pm

    I have worked in Guildford for nearly 9 years, my son and daughter are both customers of HSBC, both were First Time Buyers, both declined on affordability. I organised mortgages for both of them. At the same time I do not go a month where I do not pick up good quality business from HSBC declines. I do not know where they get their approval statistics from – just pluck it out of the air I guess?

  • Harry Moore 19th October 2011 at 12:42 pm

    I think it is bonkers that lenders like HSBC will not engage with the IFA/Mortgage Broker market, just insane.

    I would (in fact I am) put(ing) a huge amount of money on one day soon the lenders will be fighting for our introductions.

  • Roger Dewsbery 19th October 2011 at 12:33 pm

    To be fair, HSBC don’t say 9 out of 10 who “walk through the door”.
    They say “Apply”.
    So…. if you “walk through the door” and you have adverse or cannot prove your income, you may not be able to “Apply”.
    Thus, out of 10 who “Apply”, 9 may get a mortgage offer.

  • R Lang 19th October 2011 at 12:18 pm

    Fantastic response, well done Andrew

  • Chatsworth Klein 19th October 2011 at 12:15 pm

    I couldn’t of said it any better myself. Clearly HSBC has done very well to locate its branches in areas where there is no new build or shared equity in order to keep their coveted 9 out of 10 intact.

    I once made the mistake of suggesting that a client goes direct if they are confident that HSBC will produce an offer in the contractual 21 days. They did and HSBC didn’t. In fact it took twice that.

    Like you I have no problem with HSBC and the fact they do not support brokers however, the following statement is naive at best…

    “Mortgage customers used to rely on brokers for the best deals but this is no longer the case.”

    Yesterday’s article did nothing but irritate me.

    Well written Monty.

  • Anon 19th October 2011 at 12:15 pm

    I do hope all these HSBC customer have the good sense to shop around for their buildings & contents and Mortgage Protection policies, otherwise the £50 saving made on the mortgage is completely useless as their costs from these ancillary products are enormous! i just re-wrote life cover for a client paying £210pm to HSBC for £55pm on better terms and over a longer period, that means, in rough terms, the mortgage rate they are paying would need to be 2% cheaper than broker deals to acheive the same monthly outgoing, um i think not! Look at the whole packagae people HSBC is only interested in profit margin not people.

  • Gareth Evans 19th October 2011 at 12:13 pm

    @Matthew, if 80-90& of your clients matched the last example in the article then I’m not surprised 🙂

  • Andrew Charles 19th October 2011 at 12:09 pm

    I really don’t know why HSBC are even mentioned or discussed within the mortgage intermediary side of the industry, likewise I still can’t fathom why Mortgage Strategy interviewed their head recently.

    All HSBC seem to do is spout useless information such as them offering such wonderful deals etc – if they were that good then they would have had more success in the industry already. Yes, I’m aware they are big banking players and have increased their share of the mortgage market in recent times, however it very much looks like they’ve bought that at an initial loss with a view to going and selling more expensive products to people further down the line.

    As already mentioned, I don’t know why we even bother entertaining them – as far as I’m concerned we should just ignore their useless and pointless PR pieces and get on with dealing with forward thinking individuals and companies who want to work together.
    Show them the same disdain they appear to show us!

  • Matthew Gamble 19th October 2011 at 12:08 pm

    ha ha, where is the ‘like’ button.

    I have been introduced to several clients in the past where they have been honest and up front that they have an appointment with HSBC. On every occassion i make sure they keep that appointment and see me afterwards. Regardless of rates on offer, every single occassion i have gone on to secure the business and each time the client without prompting say what a much higher level of service they received with me. I am more inclined to say from my own humble experience that 80%-90% of all clients who approach HSBC in fact come away empty handed.

    Dear HSBC, please carry on driving clients estimations down and making us brokers look better than we are!

  • Anon 19th October 2011 at 12:07 pm

    If HSBC’s “direct only offering represents 2% of this direct only market.” And they have achieved an 11% mortgage market share then surely their Product Suite must be extremely competitive and attractive to the average consumer. Article has a taste of sour grapes to me

  • Jim Maye 19th October 2011 at 12:06 pm

    Brilliant response

    PS Do not tell them you have a property in the background as this will cause their back office system to explode.

  • Aidan Cox 19th October 2011 at 12:05 pm

    Statistics can say anything you want. 100% of my cases complete (did I forget to mention that is 100% of my cases after exchange – must have slipped my mind – never thought it would change perception of my figures Doh!)

  • Gareth Evans 19th October 2011 at 12:03 pm

    Never had an issue with HSBC, I bank with them and I have always found their mortgage guys to be great whenever I have used them….oh, and if you have a 90% interest-only loan and you didn’t have two years of accounts when you got it then I don’t actually want you turning the bank I use toxic!

  • Adam Smith 19th October 2011 at 12:02 pm

    Andrew, you are a legend, I love this article.

    We see so much tip-toeing around controversial but important subjects in this industry and your depiction of HSBC’s claim is refreshing to say the least.

    Keep up the good work!

  • marcus 19th October 2011 at 12:00 pm

    This made me smile, but actually it is a sad indictment of the reality. Banks care about the bottom line to the exclusion of all else. Brokers care about their clients and getting them the right deal, despite the obstacles thrown at them in the present climate.

    The sooner “execution only” mortgages are banned the better.

  • Good adviser..... 19th October 2011 at 11:58 am

    I don’t know why people keep saying that they can’t send an application to HSBC. I have done a number of applications with them over the last few years and they were more than happy to take the introduction. Obviously in order to work this, the process for the adviser is slightly different, but it’s still possible. You don’t get a proc fee, but that’s not important in providing appropriate advice.