HSBC announces ‘big’ change to mortgage criteria to give ‘real boost’ to property market | Personal Finance | Finance

HSBC is increasing the maximum amount that can be borrowed on hundreds of mortgages in a move that aims to help more customers achieve their homebuying goals.

The changes, which come into effect on Wednesday, July 10, increase the amount of borrowing available on residential home purchases and remortgages.

HSBC is also simplifying its mortgage range by streamlining its loan-to-value (LTV) tiers.

This will see the bank remove the 65 percent and 80 percent LTV tiers, allowing customers to access higher lending amounts at a higher LTV.

The new maximum lending limits will initially only be available to applications through mortgage brokers.

The uplift on lending capital repayment mortgages includes:

  • 95 percent LTV mortgages increasing from £500,000 to £570,000
  • 90 percent LTV mortgages increasing from £550k to £750,000
  • 85 percent LTV mortgages increasing from £750,000 to £2million (increased to £1million for flats)
  • 75 percent LTV mortgages increasing from £2million to £3million
  • 70 percent LTV mortgages increased to lending over £3million.

Chris Pearson, HSBC UK’s head of intermediary mortgages, commented: “The affordability of a mortgage remains at the heart of any mortgage decision, but by increasing the maximum amount of money that can be borrowed as part of a home purchase or remortgage, we will be able to help more customers with their home-buying goals.

“We’ve taken on board feedback from brokers and significantly increased the amount that can be borrowed. In the case of mortgages at 85 percent LTV, the maximum that could be borrowed on a house is an increase of over 150 percent.

“This could make the difference between someone being able to buy the property they want or need, or having to compromise by buying a smaller property with fewer bedrooms, or maybe in an area that is outside the catchment area of their preferred school for their children.”

The move has been met with praise from mortgage brokers, who claim the bank has “got the memo” that competing on criteria is as good as competing solely on rate.

Riz Malik, director at R3 Mortgages told Newspage: “The UK mortgage market seems to be getting ready for a frenzy of activity in the second half of the year. If the Bank of England gives us good news on August 1, the rest of 2024 could be stellar.”

Rohit Kohli, Director at The Mortgage Stop said: “HSBC signals their confidence in the direction of travel with these changes to their criteria. This is just as big news as interest rate reductions and often gets missed by borrowers when considering their mortgage options.”

Emma Jones, managing director at commented: “These criteria changes should not be underestimated and will give homeowners around the country a real boost. Rate cuts often dominate the headlines but today it’s the turn of criteria. Hats off to HSBC.”

Simon Bridgland, director at Release Freedom added: “The market is rampant with change. It is shaping up to be a very busy second half of the year. The seemingly small change for HSBC will send echoes around the market about its belief in the sector, as will the rate drops we are seeing hourly at the moment.”

Meanwhile, Darryl Dhoffer, mortgage alchemist (broker) at The Mortgage Expert noted that, while the “mood music has changed” in lenders, the theme isn’t so prevalent amongst borrowers.

He explained: “I’m certainly not seeing the phone ringing off the hook with calls from potential borrowers. Until inflation is consistently on or below the two percent target, over multiple months, the Bank Of England may not reduce base rates.

“That’s what I expect to trigger a return by borrowers to the market but it’s a fine balance currently.”

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