Wednesday

HSBC to match fixed-rate mortgages

HSBC has announced that it is making its new Rate Matcher mortgage available to all UK homeowners. But the new offer could see some customers paying as much as £5,000 in arrangement fees. At a time when rival lenders have been dropping their most competitive products amid funding concerns and a rapidly cooling housing market, HSBC's new deal initially sent shock waves through the mortgage market. There are an estimated 1.4 million mortgage holders who took out two-year deals during 2006 when rates were very low. Many have enjoyed mortgage deals with rates as low as 4.5 per cent, but now face a shock when they come to take out new loans, with the average two-year rate currently running at 6.29 per cent. HSBC, which is Britain's ninth-largest mortgage lender with 3.6% of the market, admitted that the upfront fees accompanying its matched deals would vary considerably, depending on the rate to be matched and the amount borrowed. For example, an existing rate of 4.54% on a £250,000 loan will only be matched if the borrower pays an upfront fee of £4,099. HSBC's new Rate Matcher offer opens on Monday and will run for five weeks. The bank said it had put in place three times its normal mortgage-servicing capacity.

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