Alliance and Leicester still not yet cut SVR

coincounter

Early last year, before the start of the credit crunch, I bought a 5 year Discount Variable mortgage from A&L which was quite competitive at the time. Since then A&L have been taken over by Santander and have stated that they don’t aim to be competitive in the mortgage market! The recent drop in the Bank of England Base rate would normally be translated to a drop in the A&L SVR within a couple of weeks, but I have just talked to A&L and they can’t give any assurances that the SVR will come down at all. It is stuck for now at a relatively high 7.19%. So they have effectively trapped me in a mortgage and are milking me. Can’t the government force banks to reduce their SVR after a BoE rate cut?

What makes it worse is that A&L have reduced the rate that those on tracker mortgages will pay when they come off the fixed term (to 6.49%). This would normally be called the SVR, but they are calling it by another name. Can a bank have more than one SVR? It is like signing up to a savings account and finding the rate has been dropped and another account with a similar name being set up in its place (coincidentally what they have done with their DirectSaver and eSaver products), except that in this case your money is trapped and you can’t get out of the first product without paying a punitive penalty.

It isn’t fair, and shouldn’t be legal. Is anyone else in the same position as me? What can we do to get our banks to behave morally and reduce their SVR?

_Andy_

coincounter wrote: »

Early last year, before the start of the credit crunch, I bought a 5 year Discount Variable mortgage from A&L which was quite competitive at the time. Since then A&L have been taken over by Santander and have stated that they don’t aim to be competitive in the mortgage market!

OK, nothing wrong with that.

The recent drop in the Bank of England Base rate would normally be translated to a drop in the A&L SVR within a couple of weeks, but I have just talked to A&L and they can’t give any assurances that the SVR will come down at all. It is stuck for now at a relatively high 7.19%.

There isn't an obligation for them to automatically reduce the SVR. If you wanted that assurance you should've taken a product that tracks the base rate, not an SVR.

So they have effectively trapped me in a mortgage and are milking me.

No-one's trapped anyone - you took on a product that ran the risk of not reducing.

Can’t the government force banks to reduce their SVR after a BoE rate cut?

No.

It isn’t fair, and shouldn’t be legal.

You're only saying it's 'not fair' because you no longer like the product. Presumably if BOE base went up and A&L didn't increase your payment you wouldn't have an issue with it.

coincounter

Of course I wouldn't complain if A&L didn't raise their SVR in line with a BoE raise, but is that ever likely to happen?!:rotfl:

When I took the mortgage out the SVR had historically always tracked the base rate. At the time tracker mortgages weren't as popular as they are now and the rate was not as good as the discount variable mortgage. IIRC they also had different conditions on overpayments that made me not like it so much either. Although there was no rule the SVR had to change with the base rate, there was the implication it would follow it quite closely. I take your point that I was taking a risk by choosing this over a tracker mortgage, but I was lead to believe that the risk was that it might be a case of only falling 0.2% on a BoE 0.25% drop, and having to wait a couple of weeks for the change - not for them to totally ignore a 0.5% BoE drop!:mad:

In my view the difference is a big one, and they are taking liberties with those of us signed up to these Discount mortgages. And isn't it taking the biscuit that they have created a new SVR for those coming off their new range of trackers?

coincounter

I've just noticed that A&L have announced a lousy 0.25% cut:

http://www.thisismoney.co.uk/mortgages/mortgages/article.html?in_article_id=454127&in_page_id=58

No announcement on their website and not even their mortgage advisors know anything about it. Let's hope it can be upgraded to a full 0.5% before it becomes official...

Ian_Griffiths_Halifax

Alliance & Leicester cuts SVR

21 October, 2008

Alliance & Leicester today announces a reduction in its Standard Variable Rate (SVR) from 7.19% to 6.94%, a reduction of 0.25%. The new rate will come into effect on Thursday 30 October.


Existing Alliance & Leicester customers on SVR or SVR related discounted products will see the change in their mortgage rate from Sunday 2 November.

The rate on Alliance & Leicester Base Rate Tracker products for new customers reduced by 0.50% on Monday 13 October in line with the reduction of the Bank of England base rate. Existing customers with a Base Rate Tracker mortgage will see their rate reduced by 0.50% from Saturday 1 November

coincounter

Thanks for this. It is funny I have spoken to a couple of people at A&L about this announcement and neither they nor their bosses were aware of it. Ho-hum.

Does anyone know if there is a limit to how many times a bank can eat up the rate cuts? I spoke to a friend and he thought there might be a term in the T&Cs that states that the SVR can not be more than a certain percentage (say 3%) above the BoE base rate. Can anyone confirm or deny this? Needless to say the A&L customer services didn't know, and I don't have my T&Cs to hand.

In only a year A&L have raised this differential from 2.14% to 2.44%, and it would be nice to know if there is a limit to how much it can milk the customers on it's books who can't switch.

olly300

coincounter wrote: »

Thanks for this. It is funny I have spoken to a couple of people at A&L about this announcement and neither they nor their bosses were aware of it. Ho-hum.

Does anyone know if there is a limit to how many times a bank can eat up the rate cuts? I spoke to a friend and he thought there might be a term in the T&Cs that states that the SVR can not be more than a certain percentage (say 3%) above the BoE base rate. Can anyone confirm or deny this? Needless to say the A&L customer services didn't know, and I don't have my T&Cs to hand.

1. No
2. It depends on the T&C you have. You really need to find your documents and look.

Contracts are fair as long as things are mentioned in the T&C. You can't make up your own rules however unfair you think your T&C are, the only thing you can do is start lobbying policiticans but I guess at the moment they are nore interested in NR mortgages.

coincounter wrote: »

In only a year A&L have raised this differential from 2.14% to 2.44%, and it would be nice to know if there is a limit to how much it can milk the customers on it's books who can't switch.

This is due to the LIBOR and the fact that A&L have had to be brought by Santander. If they were still a building society like Nationwide they would have relied on depositers cash rather than interbank lending.

shell1000

if it's any consolation I understand your frustration as I realised this two months ago when my fixed rate at a and l ended. I realised I was paying 7.2% when the variable rates of nationwide was 6.5 and first direct was 6% at the same time. Fortunately I remortgaged to first direct and now there svr is 5.5% which is below my current fixed rate. So I guess you win some and you lose some..