BRITAIN’S biggest mortgage lenders have no plans to cut rates to match HSBC’s 1.99% deal for homebuyers, dashing hopes the move will kickstart the market, The Sunday Times has learnt.
Lenders believe the £1,199 fee on HSBC’s two-year discount — considerably higher than the average fee at £790 — will deter many, as will the 40% deposit needed to be eligible for the loan.
A source at Abbey said it was unlikely to make aggressive rate cuts but was offering “incentives” on purchase-only deals such as free valuations and cashback.
Its best tracker is a two-year deal at 2.95% with a fee of £495.
Halifax and Nationwide are also unlikely to cut rates. Aaron Strutt of Trinity Financial Group, a broker, said: “Halifax and Nationwide don’t seem to be particularly worried about HSBC’s new rates as they aren’t going for massive market share.
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“They also know that many of the inquiries that go to HSBC will not complete as many borrowers will not pass its strict lending criteria.”
Halifax has a two-year tracker at 2.99% and Nationwide’s is priced at 3.08%.
Andrew Montlake of Coreco, the broker, added: “Reports are that the percentage of applicants declined by HSBC is over 70% due to incredibly inflexible lending criteria.”
HSBC’s deals are only available through branches.
Montlake added: “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.”