HSBC has announced that it is injecting 50 per cent more lending into the mortgage market, by lending more to home buyers with deposits of just 10 per cent.
In a move that will be of particular benefit to first time buyer mortgage customers, HSBC has committed a further half a billion pounds for home buyers with small deposits, allowing them to borrow up to 90 per cent loan to value.
This funding is in addition to the £1billion that HSBC had already committed itself to lend this year to improve conditions in the mortgage market for home buyers, so £1.5billion will now have been made available to borrowers with 10% deposits.
Martijn van der Heijden, head of HSBC mortgages, explained that more funding has been made available in order to keep up with the high demand for its 90 per cent LTV mortgage deals.
The housing market is a different picture now compared to the same time last year, Mr van der Heijden said, when research conducted by HSBC found that just 10 per cent of Brits were keen to move up or onto the property ladder amid falling house prices and a rising cost of living.
Today, however, house prices are widely said to have bottomed out, and mortgage interest rates have been falling, he said, so "many of those who put off their purchase last year are starting to look around again."
"HSBC has been out there throughout the recession, staying open for business for our customers. While other lenders were in retreat, we became the UK's largest lender in the first half of 2009 on a net lending basis," Mr van der Heijden continued.
With the increase in mortgage lending, he said, HSBC is "reinforcing this commitment" to home movers and first time buyers.
While overall mortgage lending remains subdued, HSBC has offered a boost for first time buyers and a comfort to other house hunters with small amounts of equity in their homes, according to price comparison website moneysupermarket.com.
"HSBC's commitment to further lending to first time buyers is an indication of its belief in this part of the market," said Hannah-Mercedes Skenfield, moneysupermarket's mortgage spokesperson.
"The last year has seen lenders place far too much emphasis on equity over affordability, and so it is encouraging to see HSBC grow its 90 per cent LTV lending book."
Ms Skenfield added that moneysupermarket's data reveals HSBC to be the cheapest 90 per cent LTV lender in the current market, "so it is not surprising they've already leant £1bn at 90 per cent LTV so far this year."
© Fair Investment Company Ltd