10
Dec
HSBC aims to lend more mortgages
The bank aims to scoop up a large slice of new mortgage lending in
2009 The bank HSBC is aiming to grab a much larger share of the UK
mortgage market in 2009. It has set aside 15bn (22.3bn) to lend to
home owners next year, roughly double the amount it lent in 2007.
New mortgage lending by all banks is predicted to come to a halt
next year because the credit crunch means most do not have fresh
funds to lend. "We will be surprised if we do not have a bigger
slice of a smaller market," said an HSBC spokesman. Falling prices
HSBC is one of the world's largest international banks and has not
been as badly affected by the financial crisis as many of its
rivals in the UK. As such, the spokesman explained, it would be
able to draw on its own internal resources to finance greater
mortgage lending, as it does not have to rely on wholesale
financial markets, nor UK domestic savers, to provide it with the
necessary funds. "We believe we are the only UK bank that can do
this," he said. If the bank lends all of the 15bn at an average of
100,000 pounds per borrower, then that would amount to 150,000 home
loans. But HSBC said it was not trying to stimulate the property
market by bringing in first-time buyers who would otherwise
continue to be frozen out. Much of its lending is likely to be to
existing borrowers who are either moving house, or simply staying
put but moving their mortgage deals. And it will continue to charge
much higher fees and interest rates for borrowers, such as
first-time borrowers, who put down smaller deposits. "It appears
house prices will fall again next year," said the spokesman. "But
the quality of our mortgage book will not fall," he stressed. Small
businesses On Sunday HSBC said it would also make 1bn pounds in
extra credit available to support small British businesses. The
government has been demanding for weeks that banks resume lending
to firms struggling as credit dries up. The bank said the money
would help "fundamentally sound businesses" with cash-flow problems
to "weather short-term shocks caused by the downturn". HSBC, which
did not take any of the government's recent bail-out funding, said
that the money for businesses was part of a 3.3bn pound global
working capital fund for small and medium-sized enterprises (SMEs).
It said lending would be decided on a "case-by-case basis" using
HSBC's normal lending criteria. Alan Keir, co-head of HSBC's
commercial banking, said: "This is new money, new money to support
struggling small businesses that bank with us." "We've heard that
their critical need is for working capital, so we're responding to
that," he said. BBC News. (2008). HSBC aims to lend more mortgages.
(Online). Available from:
http://news.bbc.co.uk/1/hi/business/7771174.stm (Accessed 10th
December 2008).