Major bank will pump £15 billion into Home Loans

Cannon_Fodder

"HSBC will lend up to £15billion in mortgages in 2009, a fifth more than this year and almost double the level seen in 2007."


Was thinking something doesn't quite add-up...how can £15Bn be double of the busy 2007, but only a fifth more than the quiet 2008? (busy/quiet in terms of the whole market)

Didn't realise quite how little HSBC was lending before;
http://www.guardian.co.uk/money/2008/dec/08/hsbc-mortgage-lending-banks-economics
"HSBC lent £7.8bn in mortgages in the UK in 2007 and £12.8bn this year. It has 350,000 UK mortgage customers."


So HSBC have been making lots of new lending in 2008, and are willing and able to do so next year.


"HSBC has traditionally been a marginal player in mortgage lending, and has about 4% of the market. But the bank, which is in a better financial shape than most of its rivals, has been one of the most aggressive lenders in the past year and accounted for 15% of new lending."


Suddenly expanding to 15% of the market could be profitable or possibly drag them late into the crunch, if their repo rate increases?

Really2

Cannon_Fodder wrote: »

"HSBC will lend up to £15billion in mortgages in 2009, a fifth more than this year and almost double the level seen in 2007."


Was thinking something doesn't quite add-up...how can £15Bn be double of the busy 2007, but only a fifth more than the quiet 2008? (busy/quiet in terms of the whole market)

Didn't realise quite how little HSBC was lending before;
http://www.guardian.co.uk/money/2008/dec/08/hsbc-mortgage-lending-banks-economics
"HSBC lent £7.8bn in mortgages in the UK in 2007 and £12.8bn this year. It has 350,000 UK mortgage customers."


So HSBC have been making lots of new lending in 2008, and are willing and able to do so next year.


"HSBC has traditionally been a marginal player in mortgage lending, and has about 4% of the market. But the bank, which is in a better financial shape than most of its rivals, has been one of the most aggressive lenders in the past year and accounted for 15% of new lending."


Suddenly expanding to 15% of the market could be profitable or possibly drag them late into the crunch, if their repo rate increases?

CF I think you are looking a bit off track there.
Their focus was not on the UK mortgage market.
New mortgage rates are now highly profitable (3% over 3 month LIBOR)
They have seen an opening in the market and take it.
They can clean up now and get the best A1 customers for little work and little risk.(they have me.:rotfl: )

IveSeenTheLight

gunnaknow wrote: »

That's not an increase of 1.23% either. It's not an increase of 15 billion, that will be the total of HSBC's lending in 2009, which is 20% more than in 2008. So it's more like an increase of 5/1.23% (0.25%) in total secured lending.

I thought it was interesting that it was almost double that they lent in 2007.

If were talking figures, £15bn available for mortgages at an average house price of £150k means that they have available funding for approx 100,000 new mortgages or more people re-mortgaging to them

gunnaknow

Really2 wrote: »

Estimated Mortgage lending thist year £255 billion

15/255*100 = 5.88% Extra Available on 08 figures.

Not quite. You need to remember that it is won't be an increase of 15 bn, that will be the total that is lent. The actual increase would be one fifth, as HSBC lent approx 12 bn this year. So the math is more like

3/255 = 85
85/100 = 1.17% increase on the UK's 08 figures.

IveSeenTheLight

WestonDave wrote: »

I suspect if you are a decent risk very few people will find better deals than HSBC (or First Direct) for a while.

That leaves the other lenders with a bit of a brown trousers moment - do they try and engage the vastly stronger HSBC in a rates war, or do they simply have to offer deals to some of the higher LTV customers.

They are certainly going to have to lend if they want to make money so who are they going to lend to? That really is the interesting fall out from this - oh and watching HSBC stick two fingers up to those who said they should have taken more risks!

As we hear on here.
It will be market driven.

If HSBC offer the best deals, then the competitors will need to be competative or lose out on the best risks to HSBC

Really2

gunnaknow wrote: »

Not quite. You need to remember that it is won't be an increase of 15 bn in lending, it will be the total lent. The actual increase would be one fifth, as the lent approx 12 bn this year. So the math is more like

3/255 = 85
85/100 = 1.17% increase on 08 figures.

Sorry you are right I just re-jiged the other persons figures.
But there figures did not take into account it only being an extra 20% and used the £15Bn as an extra.

Still a bold move in the middle of a recession.

vivatifosi

IveSeenTheLight wrote: »

As we hear on here.
It will be market driven.

If HSBC offer the best deals, then the competitors will need to be competative or lose out on the best risks to HSBC

Absolutely. I remortgaged with HSBC over the Summer and so did many of my friends, prior to this I wouldn't have looked at them as their deals weren't as good. We all have low LTVs and got good deals - far better than any of the other institutions we spent hours speaking to. I think HSBC is being very shrewd, offering competitive deals but doing it to a sector of the market where they know that the risk is lower.

It wouldn't surprise me to hear that HSBCs strategy is to get say, 40% of the low LTV value market and to leave the rest behind.

Anyone else have similar experience with HSBC?

Really2

vivatifosi wrote: »

Absolutely. I remortgaged with HSBC over the Summer and so did many of my friends, prior to this I wouldn't have looked at them as their deals weren't as good. We all have low LTVs and got good deals - far better than any of the other institutions we spent hours speaking to. I think HSBC is being very shrewd, offering competitive deals but doing it to a sector of the market where they know that the risk is lower.

It wouldn't surprise me to hear that HSBCs strategy is to get say, 40% of the low LTV value market and to leave the rest behind.

Anyone else have similar experience with HSBC?

Yes 65% ish LTV converted to their +.49 BOE lifetime tracker.

IveSeenTheLight

Cannon_Fodder wrote: »

"HSBC has traditionally been a marginal player in mortgage lending, and has about 4% of the market. But the bank, which is in a better financial shape than most of its rivals, has been one of the most aggressive lenders in the past year and accounted for 15% of new lending."


Suddenly expanding to 15% of the market could be profitable or possibly drag them late into the crunch, if their repo rate increases?

Or more probably their more prudent previous lending is allowing them to get the best credit risks by offering better deals to the best risks.

If anything they could improve their bank balance with the lowest risks and leave higher risks to other institutions.

JonnyBravo

vivatifosi wrote: »

Anyone else have similar experience with HSBC?

Yep moved to them (First Direct) from Nationwide a couple of months ago.

Very low LTV.

As has already been stated.... they are grabbing more of the ultra prime mortgages