HSBC targets first-time buyers with mortgage rate cuts: "Appetite to attract new borrowers"
HSBC is targeting first-time buyers with mortgage rate cuts from tomorrow with experts saying it shows an “appetite to attract new borrowers to the bank”.
But while rates for new borrowers are decreasing – those for existing borrowers are increasing.
HSBC said its rates on two and five-year mortgages for first-time buyers, ranging from 60% to 95% Loan to Value (LTV), are decreasing.
While existing customer rates, on two and five-year mortgages, ranging from 60% to 90% LTV, are increasing.
The only exception is 95% LTV products for existing customers that are decreasing.
Details on how much rates are changing will not be shared until tomorrow.
Financial experts said the changes are significant.
Omer Mehmet, Managing Director at Welling-based Trinity Finance said: "HSBC cutting rates for new borrowers while hiking them for existing ones sends a clear message: they’re chasing fresh business at the expense of loyalty.
“It may tempt first-time buyers, but it risks leaving existing customers feeling penalised for sticking around. In a market crying out for stability, this two-tier approach could fuel frustration and churn. If other lenders follow suit, we’ll see a sharper rate war for new business, but at the cost of long-term trust.”
David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth Ltd, said HSBC's move is an “easy win” for the bank.
He added: "HSBC are out of the blocks on Monday morning and the first lender of the week with some rate changes. They have been higher priced than other banks recently, so the reductions in new business rates shows a clear appetite to attract new borrowers to the bank.
“Meanwhile they are robbing Peter to pay Paul and increasing the loyalty product transfer rates for existing borrowers. These rates are usually quite competitve and the process much less hassle than changing lender, so increasing margins with these borrowers is an easy win for HSBC.”
Ken James, Director at London-based Contractor Mortgage Services, said he was surprised the bank was increasing rates for loyal customers.
He continued: "HSBC seems to have misunderstood the saying ‘treat them mean, keep them keen' as it just does not apply here. If you want a loyal client, you need to be encouraging them to stay with at least the same rates as they are offering new clients.
"Yes we all like to get new business in, and this does mean from time to time throwing out incentives but not at the cost of those who have chosen to use you in the past. This is great for the newbies but a bad deal for the existing clients and HSBC are potentially going to lose as much as they gain."
