What is Barclays Bank Base Rate?

MarkyMarkD wrote: »

They haven't changed the definition. It's always been Barclays' own base rate, and that's never been guaranteed to equal BoE base rate.

A few point:

(1) Barclays' glossary says or said "Barclays Bank Base Rate follows the Bank of England Base Rate" - that doesn't say "is equal to", it says "follows". That could mean anything, if you take it to extremes
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This thread is not pointless, it keeps an eye on what Barclays are doing in case they step out of line during this unprecedented period, not that I am expecting them to. Doubt creeps in as the rate their tracker mortgages are linked to is called something different to the BofE base rate and people hear that the banks are unwilling to pass on the full rate cuts to their customers for other products. You are adding to that doubt in your point (1), so this thread will continue.

However...........

Barclays state that their base rate follows the BofE base rate. For it not to do the same would be misleading. The use of the word "follows" has to convey a meaning which will not mislead, otherwise the FSA would have something to say.

To my mind, if you "follow" rules you do not deviate from those rules.

Therefore if Barclays base rate does not do the same thing as that of the BofE they will not be following the base rate and leave themselves open to all sorts of legal action and bad publicity. I really can't see how they would be able to convince people that "follows" could mean anything they want it to. They would surely have to clearly print a disclaimer saying that the two rates may not always be the same if this were the case.

My KFI only refers to the BBBR, not the BofE rate. To find the definition of the BBBR you have to look elsewhere. It is publicly advertised as following the BofE rate.

First of all , any of you folk that have a KFI or mortgage offer that states "reference to our Base Rate should be taken to be reference to the Bank of England Base Rate (or words to that effect) really should have no reason to be concerned.

However, it appears from other postings that sometime during this year the KFI, offers etc started to mention only the BBBR and it is these people (myself included) who may feel a little vunerable now. The fact that they sneeked the words "typical" and "not guaranteed to do so" into their wording on the website after the last interest rate cut has caused this concern.

This is where I stand.

1. I believed that I was getting a genuine tracker mortgage with the Woolwich. My broker (who I have utmost respect for having known him for some time) was very happy to recommend this mortgage. He obviously had no concerns. Indeed, if he looked at the Woolwich Intermediaries website he was told that the BBBR always followed the BofE Base rate (see posting above). He was told by the Woolwich that in fact he should reassure his clients that that was the case.

2. I did a bit of research myself into the type of mortgage I wanted, prior to visiting my broker, and visited the FSA's own website (Moneymadeclear) where their definition of a Tracker mortgage is "A variable rate loan with an interest rate that's at a set amount above or below the Bank of England or some other base rate, set independently from the lender. It tracks (moves up or down with) that rate." (Note that the FSA mention a base rate set independently from the lender. You could argue that if the base rate it tracks is not set independently from the lender we might as well be on a Standard Variable Rate!)

3. I visited the Woolwich website myself and saw in their glossary that "Barclays Bank Base Rate follows the Bank of England Base Rate, which can go up or down and is announced by the Bank of England's Monetary Policy Committee every month."

4. I didn't rush into taking this mortgage. I spent several weeks trying to decide whether to fix or track (a huge decision back in July with rampant inflation and talk of higher interest rates everywhere). I did my research and I visited a broker and this is what I end up with. I don't believe that the Woolwich are being very fair to their customers with their ambiguous and conflicting information. I took the risk of higher mortgage payments if interest rates went the wrong way, I expect to reap the rewards if interest rates fall.

Lets not forget however, that Barclays have passed on all cuts so far. It is only because of the aforementioned statement that appeared on their website last week that has sparked this. (I would like to know why they felt the need to put this on the website at this time).

I think if the Woolwich do try it on (and of course they may not) it is worth being prepared. I am going to keep copies of all documents, web pages etc just in case and I would urge anyone else to do so.

Rant over!

Thanks for posting that alphonet.

I am quite sure you will be fine - surely they will have to honour the BofE rate if it says so in your offer. There is no way they could break that contract.

Those of us without the clause that links us to the BofE Base Rate, although assured by Woolwich, via brokers and their website that we are tracking the BofE rate can only wonder how they will treat us if they decide the BBBR will not track.

Anyone in that position should keep copies of all web pages etc just in case. The FSA may be interested - Woolwich are hardly being transparent and are causing so much confusion which I don't think is treating customers fairly at all.

Foreversummer

Yes, there has been an important change on Barclay's website since the last bank rate fall. It used to say:

"Barclays Bank Base Rate follows the Bank of England Base Rate, which can go up or down and is announced by the Bank of England's Monetary Policy Committee every month."

It now says:

"Barclays Bank Base Rate typically follows the Bank of England Base Rate but it is not guaranteed to do so. The Bank of England Base Rate can go up or down and is announced by the Bank of England's Monetary Policy Committee every month."

In doing this though, Barclays have acknowledged that tracker mortgages were sold to customers while giving the impression that BBBR would be the same as the BofE rate. If they now set the BBBR differently to that of the BofE rate, anybody who signed up to one of their trackers or one of Woolwich's while the old wording was in place would feel very misled.

If people have KFI's which state that the BBBR is effectively the same as the BofE rate, then how can Barclay's now make this new statement as it directly conflicts with KFI's?