HSBC is to lend an extra £35bn to homeowners, further intensifying the battle among mortgage lenders to offer ultra-competitive deals to customers.
The bank, which began its drive to become a major force in the British mortgage market in 2014 and currently has about £100bn in loans on its books, is aiming to expand from an estimated 7% to about 11% of the UK market.
Rivals have claimed that HSBC’s aggressive push into the mortgage market will squeeze profit margins in the sector amid intense competition for customers.
The result has been a boon to mortgage hunters seeking good deals but has forced some lenders, such as Tesco Bank and the consumer body Which?, to quit the mortgage market.
However, Ian Stuart, the HSBC UK chief executive, told the Financial Times that it was not fair to lay the blame at its door as it remains a relative minnow in the mortgage market, with 6.4% at the end of last year.
This compares with Lloyds Banking Group which enjoys a 20% share, Nationwide 13% and Santander UK just over 11%, according to UK Finance, the trade body for UK banks and financial services companies.
“There are many critics, usually other banks, saying that we are being overly competitive in the market, and we are desperately trying to get share,” said Stuart.
The number of new home loan deals that offer some sort of incentive to pull in customers, such as cashback, free valuation or free legal fees, have risen sharply as competition has intensified.
In May, the financial data provider Moneyfacts.co.uk said there were 1,518 mortgages offering an added incentive, significantly up from the 920 in the same month in 2017.
Stuart said the bank’s mortgage strategy was based on efficiency and customer service, not just attempting to out-price rivals with cheaper deals.
“Rather than taking seven weeks to get a mortgage, it now takes you about five days – that’s pretty slick,” he said. “It’s not a price-driven strategy; it’s a good quality products, well executed strategy.”