HSBC is promising to double last year's mortgage lending in 2009, as part of its attempt to increase its share of the home loans market. It has previously had a much lower exposure to the UK mortgage market than its main competitors and has so far avoided the level of damage from the global crisis that most of the world's major banks have suffered.
No bail-out for HSBC
HSBC's commitment is to lend up to £15bn in UK home loans next year, which is 20% more than this year, as well as almost twice that of 2007. The bank is proud of the fact that it is the only major UK bank not to have required a government bail-out. It says that it has remained open for business with more funds for home, personal and small business lending. There is no change in HSBC's existing mortgage lending criteria.
The bank is also - unlike many of its competitors - passing on the full one per cent base rate cut to retail and business customers and says that it is fully committed to work with the Government to minimise home repossessions when borrowers hit difficulties.
'We won't close our doors'
Paul Thurston, HSBC's UK managing director, says: "By some estimates, net mortgage lending in the UK will fall next year, but HSBC has no intention of closing its doors to customers, nor will we compromise our reputation for responsible lending."
HSBC's move is a rare piece of good news in the mortgage lending market, but there was also some relief in the latest figures from the Council of Mortgage Lenders. CML reported that £5.5bn was loaned in October, a 10% increase in value and 14% increase in volume from a month previous - though still 57% below the value of lending compared with a year before.
CML suggests that the increase for October may in part reflect speculation a few weeks earlier of an extension of the stamp duty holiday. Average loans to value continued to fall, reflecting both lower home prices and tighter lending criteria. Typical loans to first time buyers in October were for 83% of a property's value, 3.10 times borrowers' income. A month earlier the figures were 84% and 3.18 times borrower's income.
Call for clarity
Michael Coogan, director general of the CML, is calliing on the Government to be clearer on what it wants banks to do. "To different degrees lenders are facing conflicting pressures to recapitalise against possible future losses, service government's preference shareholdings at 12%, pay a premium to access the Bank of England Special Liquidity Scheme, show forbearance to borrowers in arrears, follow base rate moves down to help their existing borrowers, keep savings rates high to support existing savers, and provide competitive rates to new borrowers and savers to maintain economic activity in a recession," he says. "And they are supposed to ensure their long term financial stability to help the UK economy rebuild itself when we are out of the recession.
"Current policy objectives are conflicting and incoherent. The government needs to decide on its key priority. The tug of war with lenders being pulled in every direction at once needs to end. We believe the government urgently needs to review the cumulative effect of the approach it has taken in the recapitalisation process on large lenders' willingness and capacity to lend. Ultimately, the response of each lender - whether on commitments to follow base rate moves or to finance new business in the future - will depend on its access to, and the price of, its funding."