LONDON (Reuters) - HSBC is preparing to exploit rivals' weakness in the mortgage market with an offer to match homeowners' existing deals, as borrowers grapple with rising costs.

Britain's biggest bank, which has just 3 percent of the UK mortgage market, is targeting some of the 1.4 million customers who come off cheap fixed-rate deals this year to face sharp rises in mortgage repayments.

Thousands of mortgage products have been withdrawn across the industry in Britain in recent months and rates have escalated, as banks cut their lending amid a rise in funding costs and a slowdown in the housing market and economy.

Unlike most UK rivals, however, HSBC has benefited from a surplus in funding, thanks to its Asian business and its modest exposure to the UK mortgage market.

"HSBC does not have to use currently-expensive wholesale funding and is clearly now set to aggressively deploy its strong deposit-gathering franchise," Collins Stewart analyst Alex Potter said in a research note.

"The effect for HSBC group is likely to be small -- we estimate that its current UK mortgage business contributes well under 10 percent of profit before tax, such that this move is unlikely to generate material earnings upgrades. However, it will put greater organic momentum behind its UK business."

HSBC's "rate matcher" mortgage will be extended to all UK homeowners from April 14, with the bank promising to match rates as low as 4.54 percent for some borrowers.

"Rate Matcher helps customers plan budgets over the medium term and eases the shock of seeking new borrowing when old rates expire," said HSBC's head of mortgages, Martijn Van Der Heijden.

The offer will, however, be open for only five weeks, and is limited to customers whose fixed-rate mortgage matures before the end of June -- where borrowing is up to 80 percent of the value of the property up to a maximum of 250,000 pounds.