First-time Buyers
HSBC restricts interest-only mortgages to wealthy
HSBC will stop offering interest-only mortgages to all but high net worth customers from 25th March.
The bank has tightened its interest-only residential lending criteria to include only customers with an income of £100,000 or more, or £50,000 in savings held with HSBC, excluding the vast majority of first-time buyers.
Borrowers must also have a premier account with HSBC or open one in order to take out the mortgage.
An HSBC spokeswoman said: “HSBC’s interest-only mortgages are provided to borrowers who can afford a monthly payment including capital, but value the flexibility of an interest-only product.
“With effect from 25th March 2013 customers applying for a residential interest-only mortgage will need to hold or open an HSBC Premier Bank Account and meet the HSBC Premier eligibility criteria. Currently the majority of HSBC’s interest-only mortgage customers qualify for Premier.
“The changes are being made ahead of the Mortgage Market Review (MMR), which is expected to treat interest-only mortgages as a niche product offering when it comes into force in April 2014.”
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Existing customers would not be affected, she said.
The news comes after Accord Mortgages announced that it was withdrawing its residential interest-only mortgages from 8pm on Sunday.
It follows a spate of withdrawals from the interest-only space at the end of 2012. Nationwide stopped accepting new interest-only applications in October and was followed by other major lenders including NatWest, RBS, Coventry Building Society and Newcastle Building Society.