HSBC has claimed that it is the only major lender to have reduced mortgage margin against base rate, and has criticised its rivals for not following suit.
Since HSBC promised back in July 2000 never to exceed base rate by more than one per cent it has cut the margin it makes over base rate by 43 per cent, thus saving its customers £260 million in extra interest.
It compares unfavourably to this the fact that eight out of the UK’s ten biggest mortgage lenders have increased their margins by up to 27 per cent over base rate since July 2000.
Carina Kemp, HSBC’s head of mortgages, said that the lender was working hard to try to maintain the best mortgage rate possible.
“Within seconds of the last cut in base rate we announced that we would pass the full 0.25 per cent reduction on to our borrowers, reducing our variable rate to 5.5 per cent,” she said.
She added: “Meanwhile, too many mortgage lenders use headline-grabbing fixed and discounted rates to attract new customers while making loyal, existing customers subsidise these deals, typically through high standard variable rates.”
HSBC estimates that its rivals’ mortgage customers have paid £2.3 billion more than they would have done if margins had simply mirrored movements in base rate.
It identifies Bradford & Bingley as the worst offender, with a 27 per cent hike in mortgage margin since 2000, while Alliance & Leicester and RBS/NatWest have both increased their margins by 20 per cent over the last five years.
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