Name and Shame Stingy Mortgage Providers

Streetperson

Hi All

You can add the Principality to the list who have "Not yet decided" but apparently will do in the next few days - God -they put them up quick enough - about a nano second after the announcements normally. SVR still 6.79. I am on a 1.5% discount with them.

Rafter

May not seem like it, but no provider reduces their rate straight away.

They might announce it but it does not apply until the start of the following month.

A few offset providers who operate on daily interest do, but that is the exception rather than the norm.

Problem is that repossessions and losses are going up for all banks and building societies. They have also had to pick up the bill for Bradford & Bingley and the Icelandic bank failures through the FSCS guarantee. The government don't pick up the bill - just those banks that are still trading and which were more prudently run - ironic eh!

What are they supposed to do?

Write to all their savers and ask for the interest back because it turns out some loans have gone bad?

Or only pass on some of the rate cuts to mortgage customers to try and make sure they don't go bust.

Might feel tough on those borrowers who are on top of their payments. However, there is a reason why tracker mortgages are more expensive than discounts or that there are large arrangement fees on fixed mortgages and that is because you are buying the certainty that your mortgage company doesn't set the price of your loan.

R.

michaelm

I got fed up waiting for A&L to announce what they were going to do for SVR customers, so I rang them yesterday. The first girl I spoke to continually interrupted me when I tried to speak and when I complained, she hung up on me. I finally got through to a mortgage adviser who told me that they expect to make an announcement by tomorrow that the full 1.5% cut will be passed on to SVR customers from the beginning of December. "Keep your fingers crossed" he said.

I might keep my fingers crossed but I certainly won't be holding my breath as they only passed on 0.25% when the 0.5% cut was announced in October.

martinman3

If you read the recent speech by the Chairman of the Building Societies Association you will see that he gives a large hint that building societies will generally not be passing on all of the 1.5% base rate cut to borrowers (or savers) because of the need to pay the levy to the FSCS.
http://www.bsa.org.uk/mediacentre/press/bailing_out_banks.htm

This was the message today from John Goodfellow, Chairman of the Building Societies Association, speaking at the Association’s Annual Lunch. He noted the strength and prudence of the mutual model, but highlighted the unfair way the sector had been forced to pay for failed banks.
Speaking on the sector’s Financial Services Compensation Scheme bill from the bail out of Bradford and Bingley and the Icelandic banks, he said “what is notable... is that there has been no requirement for any government bailout of the building society sector; rather difficulties have been dealt with within the sector. At the same time, however, societies have been called upon to pay a significant share of the cost of bailing out failed institutions in the banking sector.”
The cost of this bail out is just one of the many factors building societies must consider when structuring their interest rates. Societies will look after the interests of all members – borrowers and savers – with savers outnumbering borrowers on a ratio of about 8 to 1. Goodfellow noted “there has been a political and media chorus for all institutions to “pass on” the Bank of England base rate reduction announced last Thursday…. for all societies, however, there are a range of issues to be considered when looking at the structure of interest rates – these factors will affect each society differently.”
He concluded that “in the light of building society performance, it is essential that we examine the future funding of the Financial Services Compensation Scheme… at the very least we need to examine the pros and cons of risk related funding of the Compensation Scheme so that those institutions that act in a prudent manner are appropriately rewarded.”

Lyndap_2

I agree the Leeds are really awful, at least you got a reply to your email mine went unanswered when I asked if a cut of any sort was likley. I do not expect them to operate for no profit but they have not passed on anything since the last two reductions, I am switching companies and buying out of mimy mortgage, it will only take a few months to pay redemption as they are so uncompetative now.:mad:

bfgun

I have been asking Coventry BS for the past 2 months whether the rate on my Flexx mortgage will be reduced and am still in the dark.

Ive decided to move my mortgage as a result. I can`t waste time waiting for them to make up their minds whilst juggling the interests of savers and mortgagees.

The savers would soon move if there was better rates elsewhere.

Thomas_Crown

womblin3 wrote: »

It's been nearly two months now. I wish they'd hurry up.

Nearly two months since the 0.5% cut in the BoE base rate but it's only two weeks since the 1.5% cut.

Sidfletcher

I sympathise, Wombling. Here's the answer I got.
"

We haven't reduced rates for savers or borrowers and this decision is currently under review.

We monitor other lenders and the changes they make to their SVR. Only half of the top 10 building societies and around 50% of all the lenders we monitor have announced a rate change.


When a rate change is implemented it will be advertised in the national press (Times & Telegraph), in the Society’s branches and on our website. If you are a variable rate mortgage customer and not on annual review, you will will receive a letter detailing your new monthly payment."

I had informed the Leeds that it was ONLY them and the Chelsea who were the biggest culprits because
Cheshire and Derbyshire had "announced" through Nationwide takeover
West Bromwich - desperate problems, resignations of chief exec explain them.
Yorkshire - takingover Barnsley, no real excuse, but SVR at 6.6% a lot lower than Leeds!!
Alliance and L - well documented liquidity problems for many months explain them.
Birmingham Mids - a bank embroiled in HBOS saga.

So I reckon either the Leeds and Chelsea are masking huge problems no one knows about, or the only ones to really rip-off customers.

What's the answer, and what can we do about it? The cartel arrangement of high fees for changing mortgage provider should be reported to the MMC. It makes it all very difficult.

Sidfletcher

beecher wrote: »

And savers probably don't have much sympathy for you either. Their needs are of equal importance to yours.

Dear Beecher - what exactly are the needs of savers to earn a rate of return 2 or 3% above BBR and now a return well above RPI?
It's a bit like saying that an oil sheikh needs to earn $147 for every barrel of his oil and we should feel sorry and consider his needs now it's dropped to below $50.
Savers, like oil sheiks, are benefiting handsomely from bizarre, exceptional market conditions. And the immediate losers at the moment are struggling borrowers stuck on SVR's from bizarre, exceptional market conditions.
You're well within your right to say "tough" or "hard cheese" but not to quote "needs" of savers.

baby_fuzz

the starting thread was the whole reason why when I got my first few mortgages, I got ones which tracked the BoE baserate, and not a banks SVR.
However, I'm looking for a new mortgage now, and I can't find very many trackers, and virtually none that track BoE...