by The Investor on April 9, 2008
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What to make of news that HSBC, the UK’s biggest bank, is offering new customers a mortgage matching deal from Monday 14 April, which will match expiring fixed-rate deals for another two years?
Other banks are bolting and nailing shut closing their doors to business and putting their mortgage rates up. Have the senior bods at HSBC not been reading the newspapers recently, which only yesterday went crazy over a drop of 2.5% in house prices?
Quite the opposite. HSBC has suffered a little at the hands of sub-prime in the US, but it’s lightly exposed to UK housing, with just a 3% share of the mortgage market. That’s way out of line with its status as our biggest bank and FTSE 100 heavyweight.
HSBC is incredibly well-funded, too. Thanks to legions of diligent Far Eastern savers, it has no need to access the wholesale funding market that’s shut down due to the credit crunch, and which ultimately did for Northern Rock.
HSBC wants the best new mortgage customers
I don’t believe HSBC wants to expand its exposure to Britain’s wobbly housing market too much, however. Rather, it’s using its strength to cherry pick the new best customers, as well as cannily benefiting from free publicity due to its apparent contrariness.
The small print excludes all but the best customers:
- A 20% deposit is required to qualify for the new deal
- You’ll need to pay a hefty fee
- The maximum loan is £250,000
- According to the BBC’s Working Lunch, you’ll also need to open a current account with HSBC
The deal does look very attractive if you do qualify; the lowest rate it will match is 4.54%, which is extremely competitive in the current climate.
HSBC says the deal will only be available for five weeks from Monday, so keep an eye on the HSBC website if you’re interested.
by The Investor on March 25, 2008
We can’t wish away the credit crisis. However sensible you or I have been with our investments, borrowing and spending, we can’t wind back the clock and stop bankers throwing money at poor people who’ll never be able to pay it back, and who are often now paying a far higher price – repossession, dislocation, or even bankruptcy.
The bankers did it, everyone got cold feet, and now we all have to live with the consequences.
However rather than putting on The Smiths, pouring myself a large gin and tonic, and turning to Sylvia Plath, I thought it’d be more useful to assemble a checklist to help you avoid suffering too much fallout from this banker bungling. Who knows, you might even come out of the credit crunch richer! Personally, I’ll be happy with older and wiser – and not much poorer…
Today I look at personal finances. Tomorrow I’ll offer quick checks on investment, your income and more, so please be sure to subscribe to my feed.
1. Get out of debt
Because of the credit crunch, money is becoming more expensive.
I’ve written before about why you must get out of debt. But with the credit crunch being described as a great ‘deleveraging’ (in human speak, banks are reluctant to make new loans, and may even be calling them in), borrowing money instead of saving to buy things is getting even more expensive.
What it means for us
- If you’re already in debt, I’m not saying your bank is going to call you up tomorrow and demand all it’s money back. Rather, the climate is turning against borrowers for the first time in years.
- Banks are increasing loan rates where they can.
- They are less willing to enable customers to shuffle debt using cheap balance transfers.
- They will look much more carefully at impaired credit records, which will be a factor if you’ve been missing payments.
Action plan
Get out of debt, ASAP. Normally blogs work best when writers tell you personal stories, but I hate debt with a passion and have avoided it ever since I left college. If you’re struggling with debt, one of several good blogs on the subject is Blogging Away Debt. (But please comeback soon!)
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