Page last updated at 12:35 GMT, Monday, 8 December 2008

HSBC aims to lend more mortgages

HSBC logo
The bank aims to scoop up a large slice of new mortgage lending in 2009

The bank HSBC is aiming to grab a much larger share of the UK mortgage market in 2009.

It has set aside 15bn ($22.3bn) to lend to home owners next year, roughly double the amount it lent in 2007.

New mortgage lending by all banks is predicted to come to a halt next year because the credit crunch means most do not have fresh funds to lend.

"We will be surprised if we do not have a bigger slice of a smaller market," said an HSBC spokesman.

Falling prices

HSBC is one of the world's largest international banks and has not been as badly affected by the financial crisis as many of its rivals in the UK.

As such, the spokesman explained, it would be able to draw on its own internal resources to finance greater mortgage lending, as it does not have to rely on wholesale financial markets, nor UK domestic savers, to provide it with the necessary funds.

"We believe we are the only UK bank that can do this," he said.

If the bank lends all of the 15bn at an average of 100,000 per borrower, then that would amount to 150,000 home loans.

It appears house prices will fall again next year
HSBC spokesman

But HSBC said it was not trying to stimulate the property market by bringing in first-time buyers who would otherwise continue to be frozen out.

Much of its lending is likely to be to existing borrowers who are either moving house, or simply staying put but moving their mortgage deals.

And it will continue to charge much higher fees and interest rates for borrowers, such as first-time borrowers, who put down smaller deposits.

"It appears house prices will fall again next year," said the spokesman.

"But the quality of our mortgage book will not fall," he stressed.

Small businesses

On Sunday HSBC said it would also make 1bn in extra credit available to support small British businesses.

The government has been demanding for weeks that banks resume lending to firms struggling as credit dries up.

The bank said the money would help "fundamentally sound businesses" with cash-flow problems to "weather short-term shocks caused by the downturn".

HSBC, which did not take any of the government's recent bail-out funding, said that the money for businesses was part of a 3.3bn global working capital fund for small and medium-sized enterprises (SMEs).

It said lending would be decided on a "case-by-case basis" using HSBC's normal lending criteria.

Alan Keir, co-head of HSBC's commercial banking, said: "This is new money, new money to support struggling small businesses that bank with us."

"We've heard that their critical need is for working capital, so we're responding to that," he said.

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