HSBC UK is temporarily reserving its mortgages over 85% loan to value (LTV) for customers switching rates, the bank announced on Wednesday.
HSBC said the move will “help address challenges imposed on service levels caused by a very significantly increased demand for higher LTV mortgages”.
Borrowers with appointments in place for mortgages over 85% LTV and pipeline applications from brokers and customers that have already been received will be progressed subject to the usual checks.
Michelle Andrews, HSBC UK’s Head of Buying a Home said, “While the worst effects from Covid-19 appear to have thankfully passed, the country and the housing market have yet to return to normality. Mortgage market participation has been volatile at higher LTVs which has led to significant consequences on service levels and our colleagues for those who, like HSBC UK, have remained open for business at those higher LTVs. This is a temporary change for us. We look forward to other lenders joining us back in the market as well.
“The evidence is clear, buying a home is still important to many people. The easing of lockdown restrictions and changes to Stamp Duty have injected fresh impetus to first and second-time buyers who may have a smaller deposit and want to take advantage of that incentive.
“Offering a competitive product and being able to provide a great and timely service is extremely important to us and the recent significant uptick in applications has meant that we have not been able to consistently meet the high standards we set ourselves, which is not always a positive experience for our customers and can delay and put a property purchase at risk. As such we continually review our proposition and service levels and adjust how we are working and try to manage the inflow of new cases.
“Temporarily reserving our mortgages at over 85% LTV for those switching rates only is not a decision we have taken lightly, but one we will be reviewing regularly. We remain open for business and continue to support our customers and the wider housing market.”