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Prices & Quotes - UK Markets - HSBC Holdings (HSBA)

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Share Price:
Up 404.85p
Change Today:
7.00p
Market Cap:
82,458m
Sector:
Banks

HSBC restricts low-deposit mortgages as loan demand surges

By Frank Prenesti

Date: Wednesday 02 Sep 2020

LONDON (ShareCast) - (Sharecast News) - HSBC has been forced to throttle back on low-deposit mortgages in the face of huge demand for loans and a surprise rise in house prices.

The lender on Wednesday said it was restricting allocations of 90% mortgages in a move that would put more pressure on first-time buyers.

Its decision came as UK house prices reached a new all-time high in August thanks in part to pent-up demand following Covid-19 restrictions, according to mortgage lender Nationwide.

Prices rose 2% on the month to 224,123, following a 1.8% increase in July. This marked the biggest monthly jump since February 2004 and pushed annual house price growth up to 3.7% in August from 1.5% the month before.

HSBC said it was temporarily reserving mortgages worth more than 85% of a home's value to customers switching interest rates in the face of "very significantly increased demand for higher LTV mortgages" after the coronavirus lockdown.

The bank's UK head of buying a home Michelle Andrews said mortgage market participation had 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."

Andrews said the lockdown easing and temporary stamp duty cuts had "injected fresh impetus" to the market, but the surge in demand had swamped HSBC's mortgage operation.

"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," Andrews said.

"Temporarily reserving our mortgages at over 85 per cent LTV for those switching rates only is not a decision we have taken lightly, but one we will be reviewing regularly."

House builder Barratt on Wednesday reported a sharp rise in completions despite the Covid-19 pandemic halving annual profits. It also warned that banks were tightening lending criteria, making it harder for first-time buyers to enter the market.

Banks are concerned that the worst of the economic impact of the crisis is yet to come. With job cuts looming as government wage and business support measures wind down, they are bracing for a wave of loan defaults with most setting aside billions in provisions to cover bad debts.



HSBC last month reported a 65% slump in half-year profits as it increased provisions for bad debts by $3.8bn and accelerated plans to cut 35,000 jobs.

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HSBC Holdings Market Data

Currency UK Pounds
Price 404.85p
Change Today 7.00p
52 Week High 600.20p
52 Week Low 283.35p
Volume 69,867,048
Shares Issued 20,368m
Market Cap 82,458m

Performance Indicators

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What The Brokers Say

Strong Buy 2
Buy 4
Neutral 8
Sell 0
Strong Sell 10
Total 24
neutral
Broker recommendations should not be taken as investment advice, and are provided by the authorised brokers listed on this page.

HSBC Holdings Dividends

  Latest Previous
  3rd Interim 2nd Interim
Ex-Div 10-Oct-19 15-Aug-19
Paid 20-Nov-19 26-Sep-19
Amount 10.00¢ 10.00¢

Trades for 27-Nov-2020

Time Volume / Share Price
16:37 42,000 @ 404.85p
16:35 41,080,908 @ 404.85p
16:29 750 @ 405.65p
16:29 750 @ 405.65p
16:29 500 @ 405.65p

HSBC Holdings Key Personnel

CFO Ewen Stevenson
CEO Noel Quinn