Editorial note 6.30pm: HSBC has backtracked on its minimum down payment increase

HSBC Malta has raised its interest rate for home loans and doubled its minimum down payment requirement for first-time buyers.

The bank now requires first-time buyers to stump up 20 per cent of the property value upfront when applying for a loan. Previously, it accepted minimum down payments of 10 per cent.

Information on HSBC’s website also shows that the bank has raised its interest rates for such loans. First-time buyers are now being charged an annual percentage change rate of 3.1 per cent over the term of their loan, versus the 2.7 per cent the bank previously charged.

HSBC did not announce the changes.

The change is, however, recent. A customer who obtained an HSBC home loan quotation just two weeks ago told Times of Malta they were offered a €250,000 loan against a 10 per cent down payment.

Bank 'updates its website' 

HSBC did not reply to questions about its sudden change. 

Instead, the bank issued a statement to the market saying that it "continues to offer home loans in line with its proposition up to a maximum of 90% loan-to-value" and said it had updated its website to that effect.

However, as of 5.30pm on Friday, at least two separate HSBC Malta web pages outlining home loan conditions still displayed a maximum 80% loan-to-value offer for its Classic and HomeStart home loan products. 

An HSBC spokesperson said that its other web pages would be "aligned to the main page shortly". 

Banks across Europe have been increasing their interest rates over the past year, as the European Central Bank has tightened credit in response to skyrocketing inflation.

Locally, however, banking sector executives had said they did not expect home loan interest rates to be impacted, due to the fact that local banks are almost exclusively financed through customer deposits, rather than ECB loans.

According to HSBC’s 2021 accounts – its most recent - the bank had just over €2 billion worth of residential mortgages on its books by the end of that year.

Prime Minister Robert Abela told Times of Malta that he was informed about HSBC's changes on Thursday. Other retail banks offered different conditions and property buyers could shop around, he said. 

He urged other retail banks to not follow in HSBC's footsteps. 

Times of Malta learnt of HSBC's quiet change hours before Abela announced that first-time buyers would be able to apply for a yearly €1,000 cash grant as of next week

How much will the change cost you?

The unannounced changes will come as a shock to first-time buyers hoping to buy a first home in a heated property market, and will further disengage HSBC Malta from the local property mortgage sector.

HSBC's previous classic home loan terms versus its current ones. The previous terms were sourced from an October 5, 2022 version of its page archived by the Wayback Machine.HSBC's previous classic home loan terms versus its current ones. The previous terms were sourced from an October 5, 2022 version of its page archived by the Wayback Machine.

According to an example provided on the bank’s own website, a person taking out a €170,000 loan now will pay €77 more every month, compared to a person who secured a loan under the previous terms.

Over a 30-year term, a €170,000 loan will now cost a property buyer €263,769. It previously cost them €248,355.

HSBC's down payment and interest rate conditions for buy-to-let properties have remained unchanged.  

Rumours that the bank is looking to exit the Maltese market have been swirling for years, following a push by its global arm to disengage from smaller markets to consolidate in larger ones.

In 2020, the Financial Times listed Malta as one of the markets that the global bank intended to drop.

At the time, HSBC Malta had dismissed that report as “speculative”.

Correction February 17, 2023: A previous version mistakenly reversed the listed cost of a home loan under previous versus current rates.

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