BofE Base Rate - October 2008

ChiefGrasscutter

I would say that a reduction would send the wrong message to the international money markets.
It may be perceived by the market that 'HMG' are willing to let the £ drop.
Hence the 'hot money' may start to look elsewhere for a home which will make the current liquidity crisis considerably worse for the UK.

Ian_Griffiths_Halifax

Most Base Rate Tracker Mortgages track the BOE Base Rate. I can only think, off the top of my head, of the Barclays Base Rate (Woolwich mortgages) and Bank of Scotland Base Rates that are different. No doubt there will be more, but these are the only ones I've come across in a long time.

Realy

Generali wrote: »

I thought that too but it seems that it's not true.

The Base Rate that most trackers track is the Mortgage Bank's base rate, not the Bank of England's. Normally they are the same but they needn't be. If the cost of funding (Libor and savings rates) was to remain substantially above the base rate for a long time the banks may decide to change their base rate unilaterally.

Bankers may be stupid but they're not dumb!

The tracker I am going for is based on BOE BR.

Generali

Realy wrote: »

The tracker I am going for is based on BOE BR.

If you would like some advice, make sure it really is. I looked up a few T&Cs last week and they had their own base rate despite their advisors apparently telling people it was the BoE base rate being tracked.

Never trust a banker and I should know!

Realy

pizzagirl wrote: »

I hope for a raise in interest rates but don't expect one. If rates are reduced we'll pay for it in years to come in the form of raging inflation.

But going up we could pay for it for years to come in the form of mass unenployment.
Every one knows inflation as been down to fuel so a raise or drop will have little effect as fuel as now droped, but it will take a few months to fillter through to products.

Realy

Generali wrote: »

If you would like some advice, make sure it really is. I looked up a few T&Cs last week and they had their own base rate despite their advisors apparently telling people it was the BoE base rate being tracked.

Never trust a banker and I should know!

It is check out first direct.

"The life tracker mortgage tracks Bank of England Base Rate for the duration of the loan, and therefore your monthly payments will go up or down in line with changes to the Bank of England Base Rate."

Generali

Realy wrote: »

It is check out first direct.

"The life tracker mortgage tracks Bank of England Base Rate for the duration of the loan, and therefore your monthly payments will go up or down in line with changes to the Bank of England Base Rate."

The way they weasel out of it is with the following term:

Variation of Terms

1. If your agreement with us is in a category of mortgage agreements which we think would benefit from enhanced or additional services, we may make changes to any terms and conditions that apply to you to give you the benefit of such enhanced or additional services. We will give you 30 days written notice of such changes before they take effect.
2. We can also change the terms and conditions of your agreement with us in order to reasonably reflect the fact that any of the following have occurred or are about to occur, provided that we do not do so for any arbitrary or improper purpose:
   1. any material change in conditions in or affecting the UK mortgage markets;
   2. any change in the lending practices of banks and other financial organisations offering similar services to your agreement with us (including the terms on which they offer such services);
   3. any change in the law, regulation or in Codes of Practice or the making of a recommendation, requirement or decision by any court, Ombudsman, regulator or similar body;
   4. any change to the systems we use to manage our accounts, including changes in the technology we use;
   5. any reorganisation of our business by it being acquired by or by our acquiring another bank or organisation (so that customers with similar categories of agreements can be treated in a similar way);
   6. any event beyond our control;

Banks can't guarantee to be able to borrow at base rate so they won't guarantee to lend at base rate. Thus they will always have a weasel clause. In this case they seem to have 2.

http://www.firstdirect.com/legals/repayment_mortgage.shtml

Gorgeous_George

I would wager that no bank will ever* change a product from tracking BofE BR to tracking any other BR.

* for the purpose of this statement, 'ever' refers to any period between now and 30 days hence, subject to change



GG

Realy

Generali wrote: »

The way they weasel out of it is with the following term:

Variation of Terms

1. If your agreement with us is in a category of mortgage agreements which we think would benefit from enhanced or additional services, we may make changes to any terms and conditions that apply to you to give you the benefit of such enhanced or additional services. We will give you 30 days written notice of such changes before they take effect.
2. We can also change the terms and conditions of your agreement with us in order to reasonably reflect the fact that any of the following have occurred or are about to occur, provided that we do not do so for any arbitrary or improper purpose:
   1. any material change in conditions in or affecting the UK mortgage markets;
   2. any change in the lending practices of banks and other financial organisations offering similar services to your agreement with us (including the terms on which they offer such services);
   3. any change in the law, regulation or in Codes of Practice or the making of a recommendation, requirement or decision by any court, Ombudsman, regulator or similar body;
   4. any change to the systems we use to manage our accounts, including changes in the technology we use;
   5. any reorganisation of our business by it being acquired by or by our acquiring another bank or organisation (so that customers with similar categories of agreements can be treated in a similar way);
   6. any event beyond our control;

Banks can't guarantee to be able to borrow at base rate so they won't guarantee to lend at base rate. Thus they will always have a weasel clause. In this case they seem to have 2.

http://www.firstdirect.com/legals/repayment_mortgage.shtml

Depends on if they want the FSA on their back as that would be blatently
Miss-selling I had a 5.08% fixed that as not changed since rates went up?
Surly the legal costs of miss-selling would be worse than just honouring rates?

I think if you look at any T&C's for any company they have similar things but you have to trust some people some times. It is just the times we live in if you dont write somthing someone will always find somthing to sue you for.

Generali

Gorgeous_George wrote: »

I would wager that no bank will ever* change a product from tracking BofE BR to tracking any other BR.

18 months ago I'd have bet that there'd be at least nine of the top 10 US Investment Banks still functioning as a stand alone investment banking entity let alone none as has happened.

Anyway they wouldn't need to change for the most part, their T&Cs govern what they do. British customers seem to love being submissive to the companies they buy services from so why would they act differently in this case?