Adviser reaction is mixed following the launch by HSBC of one of its cheapest-ever mortgage deals.
While some brokers say they are wary of being priced out of the market, others argue it could reignite competition in the market.
Last week, the lender - which has pledged never to deal with intermediaries- launched a two-year discount mortgage at 1.99%, which requires a deposit of 40%. The offer is 1.95% below its standard variable rate (SVR) and may alter if HSBC adjusts its SVR.
The offering marks the latest in a line of market -leading deals that intermediary lenders have so far failed to match.
Although the rate is only available to direct customers, the deal comes at a time when the Woolwich and Cheltenham & Gloucester announced they were either trimming their rates or launching new products. The rate changes have sparked hope that some form of competition could be about to return to the market.
Jonathan Cornell, head of communications at First Action Finance, admits HSBC's offer would "make life harder for brokers", but adds the vast majority of applicants would not qualify for the rate.
"Most brokers whom I have spoken to have rolled their eyes, as if to say ‘not again'," he says. "But I do not think this will hurt the intermediary sector too much because HSBC will have service issues and not many will qualify."
Cornell says he expects more competition in the sector as a result of the deal as other lenders react.
"There have been a few lenders nibbling away at pricing, but it has nothing to write home about so far," he says. "A direct-only deal does make things harder for brokers but if it encourages competition then it may have a positive effect on the other players."
Mark Harris, managing director of Savills Private Finance, dismisses the threat to the intermediary sector, explaining many HSBC customers had been kept waiting a long time for deals in the past and often did not secure the rate anyway.
"Overall, it is good for the market to inject some competition," he adds. "Others will have to follow now. There has been an over-correction of rates. The pendulum swung too far in 2007, and then came too far back in 2008 and 2009. Hopefully, we can now find some middle ground."
Ray Boulger, senior technical manager at John Charcol, says HSBC made its move in order to meet its own lending targets, but he remains unconvinced it will spark competition.
"One can always be hopeful rates will become more competitive," he says. "But I think the recent cuts were more a result of swap rates falling."
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