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Estate agents advise caution to HSBC borrowers

Desmond Hutton, Chief Executive of the Law Society, has revealed that Estate Agents are advising HSBC mortgage borrowers about potential conveyancing delays resulting from the HSBC’s recent lender panel cull.

The Law Society are currently embroiled in a campaign to inform borrowers considering taking out a mortgage with the HSBC of possible issues of add cost and delay.  

Mr Hutton goes on to suggest that some borrowers are even opting to change lender as a result of their concerns.

Told you so

Early critics of the severe HSBC panel cuts along with the pairing up with conveyancing giant – Countrywide – have been quick to say “I told you so”.  Critics have pointed out that buyers wanting to use their own Solicitor (assuming that their own Solicitor is not one of the 43 panel members) will potential delays as their ‘file’ ping pongs between the HSBC’s Solicitor and their own.

Worse still consumers are being forced to pay hundreds of pounds in additional costs on top.

The only people more aware than homebuyers of how disruptive delays in the conveyancing process can be are Estate Agents.

Should home buyers be worried or is it a storm in a teacup?

Certainly the move by the HSBC has provoked widespread concern from consumer groups to estate agents and from lawyers to their regulators and trade bodies.  A Government e-petition (entitled “HSBC should substantially increase the number of law firms on its new panel”) has even been filed and has recently exceeded 2, 000 signatures.

Of course many of the disgruntled parties are jilted Solicitors, but that doesn’t mean they are wrong to point out the potential delays that can result from having a separate solicitor representing the lender and buyer.  

Certainly agents are best placed to ascertain the contributing factors in a sale falling through.  Many agents actively progress sales up and down the chain so word would spread quickly.

Should you be concerned if you are taking out an HSBC mortgage?

The HSBC have rebutted the Law Society’s comments stating that they have enjoyed the “strongest ever start to the year for mortgage sales”.  

It is worth remembering that if sales were falling through due to HSBC panel restrictions it is the HSBC, as much as any party involved in the transaction, that would be losing business.

It is therefore hard to see how the bank would allow the situation to continue if this were the case.

The safe play

Talking specifically about risk, Peter Dockar, Head of HSBC Mortgages recently advised borrowers of the benefits of having a “second of eyes” on a file.  In this respect we are inclined to agree.  

We would therefore suggest that if you have found a great mortgage rate with the HSBC, the relatively small additional cost (£295) incurred in paying the HSBC legal fees will probably not be enough to erode the benefits of the mortgage rate secured.

Furthermore, if you shop around for great fixed Conveyancing Rates from a local Solicitor, you may even find that the total cost of your Solicitor plus the Lender’s Legal Fees, still add up to less than they would when using the HSBC panel Solicitor for everything.

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