Last week was particularly interesting as HSBC released the latest in their line of headline-grabbing products at an extraordinary rate of 1.99%, and I was asked to provide a comment.
Comment I did, but I did not quite expect the furore that followed and the attempted rap on the knuckles HSBC themselves gave me.
Just when you thought Big Brother had been cancelled, along came HSBC and within minutes managed to get one of my quotes pulled from a website.
What got me into trouble was not this bit “Another headline-grabbing mortgage range and rate from the HSBC machine but borrowers shouldn’t get over-excited. HSBC’s tactic is to create a buzz, take in as many applications as possible and then embark on a ruthless cherry-picking exercise whereby it only lends to those it considers worthy.
I think that is fair enough, obviously not all applicants will get access to this product, and why should lenders not cherry pick at present?
But this part “Reports are that the percentage of applicants declined by HSBC is over 70% due to incredibly inflexible lending criteria, while applicants can often wait for weeks for any kind of progress, which doesn’t help if you are trying to secure a property in a market where there is a low supply of good properties and they are being quickly snapped up. It is often a good idea to run a secondary application with another lender when applying to HSBC as a backup.”
The next thing I knew a representative from HSBC was on the phone telling me not to quote untrue figures and that “HSBC announced at our half year results that our acceptance percentage for mortgages in the UK was over 7 out of 10 applicants. This continues to be the case.”
Interesting. I did not know we are not allowed to question the might of HSBC? So what about those clients who walk into the branch excited about getting a cheap mortgage who have not read the small print, who want to stretch income, have a credit issue in the background, cannot quite prove their income, suffer a down valuation, have an unsuitable property, do not have bonus payments accepted, or have too many properties in the background, etc.?
The industry has been awash with stories like this from many lenders, not just HSBC, and many brokers have stories of clients turned away from HSBC after waiting for a long time for a decision, as backed up in the press over the weekend.
Another point to mention is that if 7 out of 10 applicants get accepted, why did HSBC go into partnership with a leading broker? Which I thought was a good move by the way and I hope the pilot has been successful.
The exact figure I heard directly from a source who worked in an HSBC branch was that they cannot assist over 70% of people who come into the braches for a mortgage. Don’t get me wrong, I am not having a go at this point, as this is not unexpected for those that go direct to a lender rather than through a broker. Brokers will know which lender, if any, is best suited to help with an individual’s circumstances. Applying direct can be a bit hit and hope unless you have really studied the lending criteria.
I think HSBC are misreading my thoughts and getting worriedly uppity. I am talking about people who come through the door wanting mortgage advice – whilst they may be talking about those who get through the pre-qualifying stage and actually, after receiving “information” on the products, are allowed to fully complete an application.
I am more than happy to see the official stats on actual applications versus offers, and my intention was not to poor scorn on their official reports, but raise a point that these products are nice but many who think they can get them actually can’t.
There are already headlines that these offerings could lead to a new mortgage war, but I can’t quite see it. Rates have already begun to fall slightly this week as SWAP rates have fallen, but whether other lenders will suddenly throw caution to the wind and follow suit is doubtful whilst profit, sensible pricing and returns still rule the roost.
My point is that just reducing rates at 60% LTV from already low levels is of course a good thing, but it does not really help the current situation we find ourselves in. It helps a section of the market that is not having any issues obtaining finance.
It doesn’t help most First-Time Buyers, or those who cannot remortgage and are worried that rates may rise soon, it also doesn’t help the small businesses who desperately need small amounts of funding at competitive rates, or those charged ever inflated fees for going overdrawn or getting tuppance-halfpenny interest on their hard-earned life savings.
I feel I am entitled to express my opinion, and whilst I do not intend to upset anyone or mislead with made-up statistics, (something I have always been careful with having been the victim of in a previous life), I do think it was a fair point to make.
No doubt the discussion will rumble on and I wonder who will spring to HSBC’s defence. Perhaps if HSBC engaged fairly with all brokers this confusion and misunderstanding would not have happened.
Feel free to let me know your experiences or correct my assumptions. That is what opinions are all about and I am always happy to be corrected, but if you are telling me I am not allowed to pass comment or question a large organisation…?