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Woolwich change variable rate terms and conditions as fixed rate comes to an end
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# 1
busybee100
Old 02-01-2010, 7:24 AM
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Default Woolwich change variable rate terms and conditions as fixed rate comes to an end

I had notification from the Woolwich just before Christmas that the variable rate to be applied will be 4.49% above base when my current 5 year fixed rate term finishes (July?).

When I took out the mortgage the variable rate stated was 0.50% above base.

Is it allowed for them to change my terms and conditions?

I do understand from their point of view why they have done this but as I've been paying over the odds for the last two years I was hoping to recoup some of that when the fixed rate (4.89%) term finished.

Should I challenge the Woolwich?

Bx
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# 2
opinions4u
Old 02-01-2010, 7:40 AM
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Take a look at this thread.

Somebody else had the same fears as you and then realised it wasn't quite as bad as they initially thought.
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# 3
busybee100
Old 02-01-2010, 8:33 AM
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Thanks for the link opinions4u.

Currently I agree with some of it and have a different understanding to other parts.

Yes it currently only affects people using the reserve or already on SVR but (as I understand it) at the end of the fixed term it will kick in for the repayments.

I'll go read my T&Cs

Bx
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# 4
blueberrypie
Old 02-01-2010, 10:07 AM
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Quote:
Originally Posted by busybee100 View Post
Thanks for the link opinions4u.

Currently I agree with some of it and have a different understanding to other parts.

Yes it currently only affects people using the reserve or already on SVR but (as I understand it) at the end of the fixed term it will kick in for the repayments.

I'll go read my T&Cs
The vast majority of Woolwich mortgages go onto a tracker rate at the end of the fixed-rate period - *not* SVR. From what you've said, I suspect that's the case for your mortgage. If that's correct, your mortgage rate will be 0.5% above base rate.

For all of those on base-rate tracker mortgages, the SVR change only affects borrowing from the Mortgage Reserve Current Account - *not* the original mortgage itself.
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# 5
busybee100
Old 02-01-2010, 11:07 AM
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Thanks for your reply blueberrypie (love your username).

I think this is the relevant part of my mortgage offer

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.
Following an interest payment change,your monthly payments will be amended at the first available monthly payment date.

Tied products: You are obliged to take out a linked current account through Barclays Bank PLC as a condition of this mortgage. Please refer to section 12 of this offer document for further details.

Other restrictions: This offer is only available for customers re-mortgaging from another Lender.


This does mean they are changing my T&Cs doesn't it? My repayments will go up at the end of the fixed term? Unless of course the base rate drops into negative values.

Thank you for your advice.

Bx
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# 6
SLAMMER
Old 02-01-2010, 12:10 PM
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nothing has changed, the rate is still 4.99.

It actually benefits people who are on the svr as previously the bank could change the svr by less or more than what the bank of england did. It never was guaranteed to be 0.5% above the base rate. It was woolwich svr which they could change as they saw fit.

Now you have the guarantee of tracking the base rate by 4.49.

Its better for you.
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# 7
joolley
Old 02-01-2010, 12:16 PM
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busybee 100, according to the bit of your mortgage T&Cs, if the SVR was 6.79 when you took out the mortgage, then it was not 0.50 above base. I do not recall base ever being 6.29.

It does not appear to me as if the T&Cs are being changed, but I'm sure someone more sensible will pop in to correct me if I am wrong.

joolley

EDIT: It does look as if your rate will go up from 4.89 to 4.99 after your fix rate ends as your T&Cs says you go to SVR afterwards. Had rates remained exactly as they were when you took the mortgage, your payments would have still gone up, but to 6.79. But that is if you go on the SVR and not some other lower rate as other folk on here have suggested would happen.

Last edited by joolley; 02-01-2010 at 12:19 PM.
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# 8
busybee100
Old 02-01-2010, 2:48 PM
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Quote:
Originally Posted by joolley View Post
busybee 100, according to the bit of your mortgage T&Cs, if the SVR was 6.79 when you took out the mortgage, then it was not 0.50 above base. I do not recall base ever being 6.29.
Yes I agree, when I was typing it out I was thinking "where did I get the 0.5% from" I have had a look at the BofE base rates and it looks as if the SVR was about 2% above base.

Section 5. Overall cost of mortgage gives projection figures but says 'the figures in this section will vary following interest rate changes and if you do not keep your mortgage for 20 years'.

Therefore I believed as the rates had gone down the SVR would go down as well.
I think what I'm getting hung up about is that for the last two years I have chosen not to change my mortgage and incur a penalty because I believed I would benefit at the end of the fixed term. I feel as if they have moved the goal posts.

Thank you for both for your replies - it is good to get other peoples perspectives on this.

Bx
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# 9
SLAMMER
Old 02-01-2010, 3:07 PM
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they haven't moved the goal posts though. The rate you go onto is exactly the same and gives you greater security that it won't change anymore than the bank of england base rate.

If you don't want to go onto the svr then you can get preferential fixed rates as an existing customer, much lower than your current fixed rate.
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# 10
busybee100
Old 02-01-2010, 3:30 PM
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Quote:
Originally Posted by SLAMMER View Post
they haven't moved the goal posts though. The rate you go onto is exactly the same and gives you greater security that it won't change anymore than the bank of england base rate.
It is exactly (4.89%/4.99%) the same now, but how long before the base rate goes up? Do you mean greater security as in the SVR will always be 4.79% above the BofE base rate? I'm horrified at that thought.

Quote:
Originally Posted by SLAMMER View Post
If you don't want to go onto the svr then you can get preferential fixed rates as an existing customer, much lower than your current fixed rate.
I have only been informed of the change in how the SVR will be calculated. I would be grateful for more information about the preferential fixed rates is there anywhere specific I should go for more information?

Thank you for your time.

Bx
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# 11
joolley
Old 02-01-2010, 4:12 PM
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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 in due course.

joolley

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

Last edited by joolley; 02-01-2010 at 5:10 PM. Reason: typos
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# 12
SLAMMER
Old 02-01-2010, 4:33 PM
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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.
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# 13
busybee100
Old 02-01-2010, 5:15 PM
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Quote:
Originally Posted by joolley View Post
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



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# 14
busybee100
Old 02-01-2010, 5:19 PM
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Quote:
Originally Posted by SLAMMER View Post
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.

Quote:
Originally Posted by SLAMMER View Post
The person needs to phone woolwich to find the rates available.
I will follow up with the Woolwich.

Bx
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# 15
SLAMMER
Old 02-01-2010, 5:29 PM
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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.
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# 16
Gorgeous George
Old 02-01-2010, 5:32 PM
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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.
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# 17
MarkyMarkD
Old 02-01-2010, 6:14 PM
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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.
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# 18
joolley
Old 02-01-2010, 6:19 PM
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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)
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# 19
blueberrypie
Old 02-01-2010, 7:05 PM
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Quote:
Originally Posted by busybee100 View Post
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.

Quote:
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.

Quote:
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.
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# 20
busybee100
Old 02-01-2010, 9:44 PM
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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)

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
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