Name and Shame Stingy Mortgage Providers

beecher

Sidfletcher wrote: »

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.

Can't agree with that, as saving rates are very low at the moment and so returns from savings have been cut substantially, while borrowers 'stuck' on the SVR are finding that their payments are decreasing. Indeed many - including myself - have chosen to stay on the SVR as it is presently the cheapest option for myself.

Mr._Nice

Well relative to the BoE base rate, both mortgage and saving rates are high compared to norms over this century. That banks' SVRs, whose relative margin over BoE hasn't changed much over that time, now look attractive compared to fixed and tracker deals proves that.

has214

if a bank decides to increse your tracker rate margin, can they make it more expensive than their SVR? are trackers always lower than the banks SVR?

Sidfletcher

beecher wrote: »

Can't agree with that, as saving rates are very low at the moment and so returns from savings have been cut substantially, while borrowers 'stuck' on the SVR are finding that their payments are decreasing. Indeed many - including myself - have chosen to stay on the SVR as it is presently the cheapest option for myself.

I too am stuck on an SVR at 7.4% - exactly the point. I could move mortgage but pay prohibitive fees to do so (my point about the cartel operation). Presumably that's the same with you. Except that you say that your payments are decreasing. Well done. Mine aren't. That's the Leeds for you.

Sidfletcher

has214 wrote: »

if a bank decides to increse your tracker rate margin, can they make it more expensive than their SVR? are trackers always lower than the banks SVR?

Incredible isn't it? There are several trackers now out there higher than the lender's SVR. Just another profiteering move I'm afraid to avoid passing any rate cuts on. In fact, that is the big game at the moment. Criticised for withdrawing trackers, lenders now re-introduce them, but at such inflated rates they might well not have bothered. Who are they trying to kid? Do they just think that we're all kids and that we won't be able to guess what they're up to?

brown1950

Barclays / Woolwich have not passed on the 1.5% BOE reduction so present SVR rate is 6.64% !!

woodhouseian

bfgun wrote: »

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.

I've finally received a letter from the Coventry today about my Flexx mortgage. My interest rate has been cut from 5.25% to 4.25%.

If the interest rate falls by 1%, am I right in thinking the monthly payments on a £120k mortgage should fall by £100, ie annual payments should fall £1200? This reduction - or the proportionate amount for different sizes of mortgage debt - never seems to happen. Obviously there may be a small difference explained by monthly and annual interest, compounding, etc, but the shortfall always seems to be much bigger. In other words the payment is reduced by a lot less than £100 per month on £120 debt.

Why is that? Do the building societies decide we're going to pay off a bit more capital? Is this to protect us if the reverse happens, ie avoiding our payments going up to much when interest rates rise?

Tiddler_2

The reason is that more of your monthly payment pays off more capital the further into your term you become.

If it worked the way you suggested then to pay off your £120k mortgage over 20 years, for example, you would have to pay off £6000 every year. So the payments would be more expensive.

E.g at 5% int rate, £120k over 20 years would be £1000 per month. At 6% it would be £1100 per month.

On the current system it is £791.95 or £859.72. I know which I prefer!!

woodhouseian

Tiddler wrote: »

The reason is that more of your monthly payment pays off more capital the further into your term you become.

If it worked the way you suggested then to pay off your £120k mortgage over 20 years, for example, you would have to pay off £6000 every year. So the payments would be more expensive.

E.g at 5% int rate, £120k over 20 years would be £1000 per month. At 6% it would be £1100 per month.

On the current system it is £791.95 or £859.72. I know which I prefer!!

Thanks for that. I think I understand! So does that mean that if interest rates rise from 5% to 6%, taking the monthly payment up by £67.77, I actually pay off less capital each month when I am on the new (higher) interest rate than I paid previously on the lower interest rate? Or does not all of the 1% increase get passed on to me while I pay the same amount of capital?

I understand that on a £120k mortgage at 5% interest the monthly interest to pay is £500. I also understand that in the early years the capital payment is kept low. What I don't really understand is why the capital payments seem to change when the interest rate changes. Surely only the interest payment should change?

Chris_Type_R

Does anyone know if / when IF.COM are passing on the 1.5% drop ? I had a letter through recently advising of the 0.5% drop, but nothing since. I believe that Halifax have dropped their SVA.

EDIT: Called this morning and listened to a recording which says that the full 1.5% drop will be passed on. Pretty good news as my tracker rate finished last month. SVA is 5% now by my calculations.