Tuesday, Apr 14, 2009
Enslave yourself now
Daily Mail: Boost for first time buyers as HSBC launches cheaper loans
HSBC's shock decision to slash the price of home loans for buyers with just a 10pc deposit could breathe new life into the ailing property market. Until now, typical interest rates for buyers with small deposits had barely budged since last summer, despite the Bank of England base rate being slashed. HSBC's new deal, at 4.99%, is a full percentage point below its nearest competitor.
But those who are turned away from the usually conservative lender will find the next best deal is much more expensive.
Money Mail figures show that first-time buyers are expected to put down a whopping £30,238 deposit on average if they want to get a home loan.
Posted by little professor @ 10:04 PM (744 views) Add Comment
8 Comments
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1. James In London said...
"It is the sparse choice of mortgages for first-time buyers, along with the huge price of loans that those with small deposits must pay, which is largely to blame for the freeze in the property market."
Ahhh. So that's why.
Nothing to do with a natural retraction of credit, obviously.
There's all this talk about the Credit Crunch being a bad thing. Seems no-one stopped to check whether that conspicuously humungous Credit Spunk over the decade prior to 2008 was such a wonderful thing!
2. mark wadsworth said...
Yup. HSBC, world champions at free advertising, have earmarked £1 billion for these loans, that makes about enough for 10,000 mortgages @ £100,000 each, which even in today's depressed market is enough for about ten days' turnover ...
3. quiet guy said...
I like your title 'Enslave yourself now' but it makes me a little sad to thing about the bigger picture. None of us will truly be free of the consequences of the terrible financial mismanagement and stupidity of the big banks.
4. devo said...
"Enslave yourself now"
Not if you believe in hyperinflation.
5. new user 2007 said...
'Now we'll see what appetite for risk some of the other banks and building societies have,' says David Hollingworth, of broker London & Country."
To apply for these rates one has to have a HSBC Plus or Premier current account. HSBC Plus costs £12.95 a month. Premier accounts have no monthly charge, but one must earn at least £75,000 and hold at least £50,000 in savings and investments with the bank. There is also a booking fee of £1,499 (non-refundable even if the mortgage does not proceed).
The maximum income multiple it is giving is just *3.5. Despite all the talk of multiples falling versus average earnings, FTBs have lower average earnings (they are a younger segment, after all) and so still need higher multiples than the average suggests i.e. they generally need far more than the average multiple.
It is just free advertising. They did the same thing about 6 months ago. It was seized upon then as a sign of credit markets opening!
6. Old_traveller said...
NU07 @4, I was expecting that to be the case (premier accounts and/or limited multiples) but have not been able to get the facts straight. Maybe I should call HSBC direct? where did you get the facts on who can apply for one of these loans from? any HSBC published document you got your hands on?
7. last_days_of_disco said...
HSBC has a really smart marketing department.
8. new user 2007 said...
Old_t
All of this information was available at the time of the announcement. The small print is in the FTB section of their mortgage Internet site confirms it. Fill in the section on "how much can I borrow". I put in a 26% deposit on a fictional house and even then it came up with only a 3.5 multiple.