HSBC UK has introduced significant updates to its mortgage policies, allowing more flexibility for borrowers.
- Fees for mortgage applications can now be added to the total loan value, potentially increasing the overall loan-to-value ratio outside standard limits, with some restrictions.
- New adjustments in mortgage rates affect various loan-to-value categories for existing customers, first-time buyers, and remortgages.
- These changes will apply to both residential and buy-to-let mortgage applications across the UK.
- HSBC’s approach to affordability now considers the total loan amount, including capitalised fees, shaping future lending practices.
HSBC UK has revised its policy on capitalising fees for mortgage applications. This change permits certain fees to be included in the total loan amount, presenting the opportunity for borrowers to exceed the loan-to-value (LTV) ratio specified in their chosen product’s terms, provided the excess is attributable solely to the fee addition.
Despite this newfound flexibility, the policy stipulates that the loan cannot surpass the maximum LTV threshold of 95%, even with the added fees. This regulatory update impacts both residential and buy-to-let mortgage products across the nation, reflecting HSBC’s effort to accommodate a wider range of financial scenarios among its clients.
Beyond capitalisation, HSBC’s mortgage policy includes adjustments to LTV rates. For existing residential customers, the 2-year fixed fee saver rates at 60% LTV have decreased. In contrast, higher rates apply within the 70% to 95% LTV brackets, illustrating a strategic shift to engage a broader borrowing audience through varied product offerings.
First-time buyers, a critical segment in the housing market, will experience similar rate adjustments. Decreases are noted in the 2-year fixed fee saver for the 60% to 75% LTV ranges, while increases are present for those above 80% LTV. These changes align with HSBC’s efforts to attract first-time homebuyers by making lower-entry LTVs more appealing.
The mortgage rate adjustments extend to those looking to remortgage. The 2-year fixed fee saver products see increases in the 70% to 80% LTV categories, consistent with an ongoing trend that includes enhancements to higher LTV options in several other customer segments.
International borrowers are not left out, with rate increases reported in the 2-year fixed fee saver and standard products at 60% to 75% LTV. This expansion in options across borders suggests a proactive strategy to capture a diverse clientele.
Importantly, HSBC has announced that its affordability assessments will incorporate the entire loan amount, inclusive of any fees capitalised under the new policy. This approach marks a progressive step in assessing borrowing capacity, potentially influencing similar practices across the financial sector.
These strategic adjustments underscore HSBC’s commitment to adapting its lending practices in response to evolving market conditions.
