HSBC, one of the largest banking and financial services organisations in the world provides a comprehensive range of financial services: personal financial services; commercial banking; corporate, investment banking and markets; private banking; and other activities through an international network linked by advanced technology, including a rapidly growing e-commerce capability.
Being Britain's biggest bank, HSBC is trying to help the first-time buyers to become owners by offering solutions for borrowers to club together on their mortgage. The legal limit for the number of joint owners allowed on one property is up to four persons and this is what the bank is offering.
According to their research, three quarters of first-time buyers would consider buying a house with friends. The reason for this reaction is the rising in house prices that pushed the property ladder out of the reach of thousands of aspiring homeowners. The result of the research is sustained by the statistics revealing that since the end of 2005, the number of group loans issued by HSBC has soared by 50 per cent.
Barry Blackshaw, from HSBC explains that: "We are addressing customer need. First-time buyers are increasingly unable to meet traditional lending criteria as a result of house-price growth. As prices are unlikely to fall any time soon, we are expecting this trend to continue." The group loans can be a solution to the pressure faced by banks and building societies to offer bigger loans to struggling first-time buyers.
The Council of Mortgage Lenders, the trade association for the mortgage lending industry, with members account for around 98% of UK residential mortgage lending reveal that first-time buyers are borrowing a record average of 3.21 times their incomes.
Referring to the group loans, Sue Anderson from the CML explains that: "Borrowers need to be careful. This kind of offer can create unstable households, which could ultimately be bad news for the owners and for the property market."
In spite the concern that solutions such as clubbing together could create problems for unwary first-time buyers, the group mortgages are rising as a proportion of total lending in the UK. CML figures show that between 2000 and 2005, the number of mortgages lent to groups of three or more borrowers almost doubled.