First Direct, a HSBC company, took the decision to suspend its entire range of mortgage products in a bid to clear the backlog of applications amidst a period of unprecedented demand.

Other banks have today followed suit with Co-op withdrawing all two-year deals and Lehman Brothers removing itself from the UK market all together. (more…)

Following a meeting between Mervyn King, Governor of the Bank of England and the Chief Executives of Barclays, HBOS, HSBC, Lloyds TSB and RBS, it is understood that Mr. King is considering allowing the use of a wider range of assets to stand as collateral. Importantly this includes mortgages.

Mr. King had been reluctant to do this as he did not want to be seen to be bailing out Banks that had acted irresponsibly in the current economic climate. Whilst considering relaxing the criteria, the Bank has agreed to make an additional £5bn a week available to the Banks until the next interest rate meeting on the 9th April.

The extra funding was much needed as it was three times oversubscribed. This very fact indicates there is still significant pressure within the banking system.

HSBC has written-down £8.7bn due to the size of its exposure to US markets and the decline in the US housing markets and hence the value of its loans. The credit crunch leaves HSBC cautious in its outlook for 2008 and believes the situation could get worse before it gets better.

 Despite the level of write-downs HSBC, the UK’s largest bank saw its profits rise by 10% to £12.2bn. The fundamentals of HSBC remain strong and to send a positive message to the market it has increased dividend payments to shareholders by 11%.