HSBC’s introduces a unique ‘RateMatcher’ guarantee

HSBC announces that from tomorrow, 1 February 2008, it will guarantee to match the interest rate its fixed rate mortgage customers currently pay when they roll off their existing deal.

This guarantee will enable HSBC mortgage customers to escape the worst effects of mortgage rate shock the Bank of England expects 1.4 million homeowners to face over the coming months.

HSBC’s ‘RateMatcher’ offer will be available to HSBC’s borrowers rolling off fixed rate deals until at least the end of April. Customers will be asked to pay a fee to match their old fixed rate, with the fee depending on the length of the fixed term and the actual rate they currently enjoy. HSBC estimates that over 93 per cent of its customers rolling off fixed rate mortgages in February will have a fee of less than £500 to pay. Customers can also choose from HSBC’s other offers.

Many HSBC customers will be coming to the end of two, three and five year fixed rate mortgages over the next three months, with rates from at low as 4.6 per cent. The RateMatcher offer is completely flexible, customers finishing their two year deals can choose to re-fix over one, two, three or five years at exactly the same rate.

Martijn van der Heijden, HSBC’s head of mortgages said, “The Bank of England has warned debt repayments as a proportion of household income are at a 15 year high, and with 1.4 million homeowners facing steep increases in mortgage payments in 2008, this stretch is likely to become worse. To remedy this, HSBC’s RateMatcher offer is designed to smooth out the ups and downs of moving between mortgage deals and create a sustainable platform for homeownership.”

Non HSBC mortgage customers finishing their fixed rate periods and who originally picked best buy loans are facing a considerable hike in payments. The Bank of England base rate stood at just 3.75 per cent in February 2003, in contrast, today it is 5.50 per cent. According to Moneyfacts, the best buy two year fixed rate mortgage in 2006 was 4.38 per cent, the three year best buy in 2005 was 4.79 per cent and five year in February 2003 was 4.49 per cent. All these loans are with lenders whose current standard variable rates are 7.40 per cent or higher.

Homeowners who don’t have a mortgage with HSBC and who are facing significant repayment shock can still take advantage of HSBC’s ‘best buy’ fixed and discount loans, including a two year fixed rate of 5.46 per cent with a £999 fee or a 4.99 per cent two year discount mortgage with a £1999 fee. A Tracker is also available at just 0.23 above base rate for the life of the loan - 5.73% - for a £599 fee.