HSBC mortgage-match deal offers ray of hope

Published on Wednesday 9 April 2008 13:38

HOMEOWNERS have been given a ray of hope amid fears of a property crash after the UK's biggest bank offered to match existing mortgage deals.

HSBC said it will match any existing deal for a further two years for customers, with rates as low as 4.54 per cent.

The announcement comes after new figures revealed house prices in Edinburgh are rising at their lowest rate for 15 years.

The worldwide credit crunch has made it increasingly difficult for buyers to secure mortgages. Abbey became the final mainstream lender to stop offering 100 per cent mortgages on Monday.

Now HSBC, which has three per cent of the mortgage market, is targeting the 1.4 million customers who come off cheap fixed-rate deals this year. The offer, which starts on Monday and will last for only five weeks, and will be subject to conditions and a fee.

Borrowing will be limited to 80 per cent of the value of the property, and will be subject to conditions and a fee. In line with all HSBC's mortgages, the product will not be available through brokers.

Joe Garner, UK personal services head at HSBC, said: "We're in an extremely strong position whilst others are stepping back. We remain competitive and are selective about the right sort of business."

Housing experts in Edinburgh say there is no prospect of a long-term property crash, despite prices rising at less than half the rate of inflation over the last three months. The number of homes sold in the city has dropped by nearly seven per cent compared to two years ago.

Flats in some areas, including Marchmont and Bruntsfield, have seen a drop in value of five per cent in the last quarter, according to the Edinburgh Solicitors' Property Centre. But they still say that there is steady growth in more "affordable" areas, as well as a strong market for family homes.

Many customers are finding they cannot find a home loan as banks are restricting their lending, due to difficulties obtaining funding from the money markets. The number of mortgage products available across the whole market has fallen to just 4065, down from 5392 at the beginning of last week. This compares to 15,599 in July last year.

Martin Ellis, Halifax chief economist, said the group still expected there to be only a "modest fall" in UK house prices for the whole of 2008. The gloomy data on the housing and mortgage market increases the likelihood that the Bank of England will cut interest rates by a further 0.25 per cent to five per cent tomorrow.

Prime Minister Gordon Brown insisted that any falls were "containable", saying they had to be seen in the context of house price gains during the past decade.

He said in a BBC interview: "We've seen house prices rise by about 180 per cent over the last ten years and they have risen by about 18 per cent over the last three years, so a 2.5 per cent fall is something that is containable."

He added that the Government was looking for further ways to help homebuyers.