Nationwide tracker and I am sure there is no collar

space_rider

surreysaver wrote: »

After reading this thread, I checked my Abbey National paperwork for my 0.75% above BoE traker, and my mortgage interest rate cannot be lower than - wait for it - 0.0001%!

Mine too, but the difference between their SVR and the rate I`m paying is being put away each month:beer:

Gorgeous_George

No collar could lead to no bank/building society. They cannot lend money more cheaply than they can borrow it. At least, not on a large scale.

Maybe they will require these mortgages to be repaid.

GG

space_rider

Gorgeous_George wrote: »

No collar could lead to no bank/building society. They cannot lend money more cheaply than they can borrow it. At least, not on a large scale.

Maybe they will call their mortgages in and require them to be repaid.

GG

I`ll leave them to worry about it if and when the time comes. I`m sure they will change the T&C`s as they are at liberty to do.

MarkyMarkD

needafilip wrote: »

I am sorry but my opinion is that you are wrong.
The aspect you do not address is the fact that as interest rates fall especially when they fall rapidly the margins that lenders make on fixed rates increases (lenders lend long term but borrow short term).

In this regard, you are completely wrong. Lenders hedge their fixed rate mortgages. Their income on a fixed rate mortgage is a margin over or under LIBOR, once the hedge is in place. So if LIBOR falls at the same rate as BBR (and in fact LIBOR has fallen considerably more than BBR in the last 6 months) the lender's income falls as rates fall.

Therefore the overall net effect of having to take a hit on trackers but making on fixed interest should make this a zero sum game.

That's complete rubbish, as they are losing on both.

'Prudent' lenders (quite frankly a risible statement considering the current situation) should have calculated their margins and profitability when they issue each product for any given scenario. Your argument does not explain how some lenders can track BBR all the way down and not others, are you suggesting these lenders are being charitable?

The only lenders who are currently tracking BBR with their SVRs are lenders who have taken money from the government and hence have to do so for political reasons. They aren't being charitable, but they are eroding their margins significantly to accomplish this.

I have no issue with lenders having collars and caps on their products, so long as they are clearly described and transparent in the illustartions they provide to customers in the KFI (which is a regulation of the FSA). My specific problem is with the way in which Halifax try to hide this information by not describing a specific 'floor' rate in their KFIs or Offer documentation. I am not the only person who believes this and would expect this to be the judgement of any reasonable person. I for one will be fighting this all the way to make sure Halifax honour their contractual obligations.

I've said the same thing. If you have a post-mortgage regulation Halifax product, there's no way at all they can not mention a collar in their KFIs. If they do, that is a breach of the KFI requirements and that collar is not legally enforceable. Which is why I suspect that they will never actually apply the collar if it is indeed non-compliant in their documentation.

MarkyMarkD

No, they cannot "change the Ts & Cs as they are at liberty to do". If you sign a long-term contract with someone, neither party can change the terms unless the contract allows them to change that specific term. That is NOT generally a term in lenders' mortgage contracts.