HSBC prvided a major boost to the Government’s Help to Buy scheme when it confirmed that it would begin offering mortgages worth up to 95% of property values under the initiative.
It is the first major lender outside state-backed banking groups Royal Bank of Scotland (RBS) and Lloyds to announce participation in the £12 billion programme.
Taxpayers will guarantee up to 15% of a property’s value, in return for a fee charged to lenders, allowing homebuyers to purchase with deposits as low as 5%. Some estimates suggest 180,000 loans could be taken out under the initiative.
Estate agent Haart predicted Help to Buy would boost property transactions by 10-15% in the next 12 months and reduce the average deposit required by first-time buyers from £33,948 to £7,218.
The scheme brought forward by three months, despite fears of a housing bubble had until now been backed only by brands controlled by RBS and Lloyds, together with smaller players Virgin Money and start-up Aldermore.
The Treasury said these banks represent more than 30% of the market. HSBC said it had a market share of 13.6% of new mortgage approvals in 2012.
It is now planning to offer Help to Buy mortgages between 90% and 95% loan-to-value (LTV) later this year through its branch network.
Antonio Simoes, head of HSBC UK, said it promises to beat or match rates from high street competitors at 90% LTV.