Woolwich change variable rate terms and conditions as fixed rate comes to an end

2

Comments

  • SLAMMER_2
    SLAMMER_2 Posts: 35 Forumite
    yes but if the base rate goes up to 4% than the old standard variable rate would have gone up by at least 4%, possibley more.

    The person needs to phone woolwich to find the rates available.
  • busybee100
    busybee100 Posts: 1,530
    Name Dropper First Post First Anniversary
    Forumite
    joolley wrote: »
    BB100, you're right. If rates go back to 4, the SVR will be an eye watering 8.45! Not sure if Woolwich intends to keep its BBBR at BOE + 4.45 in those circs. That or whether customers will stick to this follow on product. I am keenly watching this unfold because I don't know if these changes will extend to other products as well.

    joolley

    Might be worth seeing an all of market broker to start looking at other products that may suit you.

    I'm glad you understand where I'm coming from. The timing of this is also of concern to me. On the thread I was directed to, the edit said this affects the mortgage reserve users only - and won't affect my main mortgage.
    That is correct today there is (almost) no difference. I suspect someone could be given that response by Barclays/Woolwich and think all is OK.

    I agree they may change the way they calculate SVR in the future but there is no guarentee, just as I appear to have no guarentee now. I've also read the tracker thread now and I do wonder what's afoot.

    I'll keep you posted.

    Bx



  • busybee100
    busybee100 Posts: 1,530
    Name Dropper First Post First Anniversary
    Forumite
    SLAMMER wrote: »
    yes but if the base rate goes up to 4% than the old standard variable rate would have gone up by at least 4%, possibley more.
    I'm sorry I don't understand your logic here.
    SLAMMER wrote: »
    The person needs to phone woolwich to find the rates available.
    I will follow up with the Woolwich.

    Bx
  • SLAMMER_2
    SLAMMER_2 Posts: 35 Forumite
    the logic is that if the base rate rises all the banks put their base rates up. They always have done, they always will.

    Previously if the base rate has risen by .25% Woolwich have actually increased it by more.

    When you took your mortgage out the svr was over 6%. Since then the base rate has gone down by 5% yet the svr has only come down by about 3%.

    You now have the certainty of knowing what the svr will be in the future which you didn't have before.

    you and the other chap are looking to panic when there is no need to.

    No doubt you'll still panic so thats me done trying to reassure you.
  • How nice of them (B******s Bank PLC) to send this out over the festive period.

    GG
    There are 10 types of people in this world. Those who understand binary and those that don't.
  • MarkyMarkD
    MarkyMarkD Posts: 9,912
    First Post First Anniversary Combo Breaker
    Forumite
    They have done this because of the Payment Services Regulations. By making it a tracker rate, they can vary it very quickly if rates go up; under the PSRs if it was an administered rate they would have to give 60 days' notice which is pretty silly for a mortgage but covers mortgage current accounts.
  • joolley
    joolley Posts: 100 Forumite
    SLAMMER, I'm a girl.

    BB100 asked questions, I attempted to answer them. how is that panicking?

    I certainly am not. I have 2 very good mortgages with Barclays and in the process of porting one of them to my new home. At the risk of sounding repetitive, both mortgages are BBBR +0.99 and both are just under 50% LTV, one is 1 1/2 joint salries and the other is just under my annual salary. Merely answering the questions posed by BB100 and stating that if the T&Cs no longer suit, that a chat with a whole of market advisor or barclays may be in order.

    That is certainly what I would do if this change were to affect me. If you ask me that's far from panicking.

    joolley (not a chap)
    Keep it simple and you will find the middle way.
  • blueberrypie
    blueberrypie Posts: 2,395
    Combo Breaker First Post Name Dropper First Anniversary
    Forumite
    busybee100 wrote: »
    4.Description of this mortgage

    Lender: Barclays Bank PLC

    Product: 4.89% S&S Fixed until 30/09/2010(YT1): A fixed rate of 4.89% until 30/09/2010. After 30/09/2010, the rate will be Barclays bank PLC Standard Variable Rate, currently 6.79%, for the remainder of the term.

    Okay, so you're one of the customers who will go onto SVR after their fixed-rate period.
    This does mean they are changing my T&Cs doesn't it?

    No, it doesn't. You were going onto SVR, you're still going onto SVR. What they've changed is how they calculate SVR. Previously, it would have gone up when the base rate did (that's what SVRs usually do) and possibly down when the base rate did (that's what SVRs *sometimes* do). Now? - it will still go up and down, but the increase/decrease will be determined by the change in the base rate, rather than being at the whim of Woolwich.
    My repayments will go up at the end of the fixed term?

    Yes, but that would have happened even if they hadn't made this change. The SVR is a *variable rate* - you would always have gone onto whatever the SVR happened to be at the end of your fixed-rate period, and that rate would have gone up when the base rate went up, and down (if you were lucky) when the base rate went down. Regardless of this change, if you were going onto SVR tomorrow, you'd have gone onto the 4.99% rate. If this change hadn't occurred, and the base rate had increased to 4%, your SVR would always have increased - and possibly by more than the increase in the base rate.

    The only difference now is that Woolwich have said "our SVR will be related to the base rate in *precisely* this way".

    One further note: some Woolwich mortgages allow you to switch to one of their other products at the end of your fixed-rate period, with no fee (even if there would normally be a fee payable for that product). It would be worth checking in a few months if this is the case for your mortgage, as there might be other products which fit your needs better.
  • busybee100
    busybee100 Posts: 1,530
    Name Dropper First Post First Anniversary
    Forumite
    OK. I think I'm nearly there thanks to blueberrypies' further explanation.

    I've just googled Barclays SRV to find the current rate and I now understand why SLAMMER said it would be the same regardless. (I thought you were comparing my current fixed rate of 4.89% to the new SVR calculation of 4.99% where in fact you were comparing the current SRV to the new SRV):D

    And I take your point blueberrypie, of it not being a change in T&Cs but I do feel the essence of the mortgage offer has changed. I think my misunderstanding(?) has occurred because I have not followed the various changes for 5 years so was still under the impression the SVR followed the Bof E rate more closely. Welcome to the real world did someone say?:rolleyes2

    I am fortunate that I have only a small mortgage and do not use the mortgage reserve but because I'm intending to downsize and be mortgage free I was going to let this mortgage ride into the SVR period, so I will have to build in this new information. Timing is the major factor I guess.


    For those 3% (apparently)of Barclays customers this effects:

    The change will immediately affect anyone using their mortgage reserve.
    At the end of the fixed rate term the mortgage repayments are always 4.49% above the BofE rate, (definately one to watch later this year).

    Have I missed anything?

    Thank you everyone for your help.
    Bx
  • Good to see this debate on this forum..

    I signed upto a lifetime tracker rate with Woolwich back in 2006. The reason being was that I thought that I did not to have to keep switching banks every few years and I would just ride the BoE rate at my risk plus a set percentage. I have also just received a letter from Barclays that states the change to the SVR rate to 4 point something from 10th Feb. I signed a deal with the Woolwich back in 2006 that stated "A Variable Rate which is 0.39% above Barclays PLCs Base Rate, currently (per 2006) 5%, for the whole term. Changes in the base rate made during the following months will apply". I have borne the risk of paying increased mortgage payments as interest rates have increased but as they have decreased, Barclays have decided to make massive changes to interests rates. Does anyone else have a similar mortgage and in a similar situation.. advice - should I complain??
    Based on the letter I will have to increase my mortgage payments by about 8 fold from 10th Feb... I do not think that this is fair or ethical.. but not have dealt with the FSA or Financial Ombudsman on this matter.. I fear that going to them will only act in the interest of the Banks and that their decision is generally final.. but even then I understand that it is not legally enforceable??
    Susan


    Okay, so you're one of the customers who will go onto SVR after their fixed-rate period.



    No, it doesn't. You were going onto SVR, you're still going onto SVR. What they've changed is how they calculate SVR. Previously, it would have gone up when the base rate did (that's what SVRs usually do) and possibly down when the base rate did (that's what SVRs *sometimes* do). Now? - it will still go up and down, but the increase/decrease will be determined by the change in the base rate, rather than being at the whim of Woolwich.



    Yes, but that would have happened even if they hadn't made this change. The SVR is a *variable rate* - you would always have gone onto whatever the SVR happened to be at the end of your fixed-rate period, and that rate would have gone up when the base rate went up, and down (if you were lucky) when the base rate went down. Regardless of this change, if you were going onto SVR tomorrow, you'd have gone onto the 4.99% rate. If this change hadn't occurred, and the base rate had increased to 4%, your SVR would always have increased - and possibly by more than the increase in the base rate.

    The only difference now is that Woolwich have said "our SVR will be related to the base rate in *precisely* this way".

    One further note: some Woolwich mortgages allow you to switch to one of their other products at the end of your fixed-rate period, with no fee (even if there would normally be a fee payable for that product). It would be worth checking in a few months if this is the case for your mortgage, as there might be other products which fit your needs better.
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 342.5K Banking & Borrowing
  • 249.9K Reduce Debt & Boost Income
  • 449.4K Spending & Discounts
  • 234.6K Work, Benefits & Business
  • 607.1K Mortgages, Homes & Bills
  • 172.8K Life & Family
  • 247.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards