Barclays Bank Base rate - Change of Definition

samuel248

Barclays/Woolwich explicitly state that the BBBR will follow the BOE rate.I cannot find anything in my mortgage pack that says they can get out of doing that by moving the goalposts when it suits them.
I took out a Woolwich Lifetime tracker in June 2008 at 0.74% above the then BBBR/BoE of 5%. I took a gamble on doing this rather than taking the safe option and fixing at about 5.49%. I gambled on the base rate falling. Bar/Wool gambled on it not falling by offering me the mortgage. I am currently winning the gamble and hope to win more with further base rate cuts. I expect them to pay me my winnings in full or see you in court boys.
If Bar/Wool. did not cover their backsides against the then unforeseen cuts in the base rate by imposing collars in the t&C's of my mortgage, then that is their lookout. If the base rate rises drastically, will it be ok for me to impose a retrospective ceiling on my tracker rate or insist that the full rise in the base rate is not passed on to me? I think not.
If you're on a fixed rate then unlucky - you had the choice of a tracker or SVR and chose otherwise and cannot now ask for a cut.

CowboyChic

samuel248 wrote: »

Barclays/Woolwich explicitly state that the BBBR will follow the BOE rate.I cannot find anything in my mortgage pack that says they can get out of doing that by moving the goalposts when it suits them.
I took out a Woolwich Lifetime tracker in June 2008 at 0.74% above the then BBBR/BoE of 5%. I took a gamble on doing this rather than taking the safe option and fixing at about 5.49%. I gambled on the base rate falling. Bar/Wool gambled on it not falling by offering me the mortgage. I am currently winning the gamble and hope to win more with further base rate cuts. I expect them to pay me my winnings in full or see you in court boys.
If Bar/Wool. did not cover their backsides against the then unforeseen cuts in the base rate by imposing collars in the t&C's of my mortgage, then that is their lookout. If the base rate rises drastically, will it be ok for me to impose a retrospective ceiling on my tracker rate or insist that the full rise in the base rate is not passed on to me? I think not.
If you're on a fixed rate then unlucky - you had the choice of a tracker or SVR and chose otherwise and cannot now ask for a cut.

I think what you say is absolutely right. I am in exactly the same position, and we both took a risk on a tracker mortgage at the time of choosing the product. And yes, I'd be moaning if the rates went up, but I accept I'd have no right to complain officially to the bank. It was my choice, and like most things you've got to take the highs and lows equally.

As such I think Barclays have to do the same, and if they introduce a collar retrospectively, I'd expect a matching ceiling introduced. Although let's face it, we know that banks are not really going to be that nice to us!

A tracker should be just that - a tracker. However with the change in definition prepping the way, I suspect if interest rates go much lower the BBBR will not continue to match the BOE rate, regardless of what we signed up to.

Who knows, time will tell. I guess even if it sticks at 2% while the BOE rate falls, its still a sweet deal.

RobertoMoir

CowboyChic wrote: »

I think what you say is absolutely right. I am in exactly the same position, and we both took a risk on a tracker mortgage at the time of choosing the product. And yes, I'd be moaning if the rates went up, but I accept I'd have no right to complain officially to the bank. It was my choice, and like most things you've got to take the highs and lows equally.

As such I think Barclays have to do the same, and if they introduce a collar retrospectively, I'd expect a matching ceiling introduced. Although let's face it, we know that banks are not really going to be that nice to us!

Would be nice to see all the banks play fair and have the collar work in both directions wouldn't it? :rolleyes:

As far as the T&Cs changing... Question (I honestly don't know the answer, but its central to the point).

A Barclays/Woolwich mortgage says it uses the BBBR in the T&Cs. Fair enough. Does it say in the T&Cs or in other supporting documentation that would be considered part of those that the BBBR is always going to be equal to the BoE rate?

At the moment this is a theoretical distinction, as they haven't yet deviated from it. I think they're hedging their bets in case the treasury and BoE do something that from their point of view would be a very bad move indeed. I suspect a lot of banks are worried at the prospect of further cuts in the BoE interest rates, and if it makes lending unprofitable for them then they'll be more reluctant to lend, having an opposite effect from what the govt. is hoping?

Peter_D_2

RobertoMoir wrote: »

A Barclays/Woolwich mortgage says it uses the BBBR in the T&Cs. Fair enough. Does it say in the T&Cs or in other supporting documentation that would be considered part of those that the BBBR is always going to be equal to the BoE rate?

When I took out my BBBR+0.19% lifetime Tracker there was a separate piece of paper attached to the mortgage T&Cs that explicitly stated (wording from memory as I am not at home), "In this document all references to BBBR should be taken to mean Bank of England base rate." I can check exact wording over the weekend if anyone is interested.

I do not know whether this was the case with everyone's mortgages but it leaves Barclays no legal wiggle room with mine!

Time to hunt up an address to ask for clarification with a followup to the FSA when/if they do not reply.

Peter

samuel248

As far as I'm concerned Bar/Wool are a bit like a tight rope walker who has forgotten to fix a safety net ie. a collar.
If they now fall and hit the ground (0% base rate) - tough! They would be quick enough to pass on rises to the BoE/BBBR so they can take the rough with the smooth as we the customers have to.
If some executive at Bar/Wool has failed to dot the i's and cross the t's when drawing up the t and c's of their tracker products then that's their fault.
I get the impression on some posts regarding this issue that some people have a "Oh well, that's banks for you. Never mind" attitude. Get a grip! If we the consumers don't stand up to potential breaches of contract (if they definitely don't intend breaking their contract why have they ammended the definition overnight?) then we deserve to be walked all over.
The "2% is a good deal so never mind" attitude doesn't cut it with me. Until today,Bar/Wool implied and stated that the BBB and the BoE rate was one and the same. They failed to suggest or imply that there ever would be any difference.

foreversummer

I absolute agree samuel248.

I think the FSA should be told of this. They certainly got involved with the Halifax collar issue, I think they would be rather interested in this latest development from Barclays/Woolwich.

When I have the time later, I will try to find out how to contact them.

Foreversummer

seikothrill

foreversummer wrote: »

I absolute agree samuel248.

I think the FSA should be told of this. They certainly got involved with the Halifax collar issue, I think they would be rather interested in this latest development from Barclays/Woolwich.

When I have the time later, I will try to find out how to contact them.

Foreversummer

Believe you me if they suddenly enbforce this new wording to my mortgage I will be contacting the FSA and Ombudsman.

I am confident this is a cynical attempt to protect themselves from further reductions

RobertoMoir

samuel248 wrote: »

As far as I'm concerned Bar/Wool are a bit like a tight rope walker who has forgotten to fix a safety net ie. a collar.
If they now fall and hit the ground (0% base rate) - tough! They would be quick enough to pass on rises to the BoE/BBBR so they can take the rough with the smooth as we the customers have to.
If some executive at Bar/Wool has failed to dot the i's and cross the t's when drawing up the t and c's of their tracker products then that's their fault.

I completely agree. I've seen a reply on the thread where someone mentioned that they do have documentation as part of their mortgage where Barclays link their BBBR rate to the BoE rate. If they try to weasel out of any obligations generated here I hope the people affected kick off big time and show Barclays up.

I still stand by my earlier statements though - they're not obliged to do something that they think is suicidal, at least with regards to new contracts. Just as we're entitled to take our custom elsewhere if we think new deals are uncompetetive, and I'd strongly encourage people to do so (I bank with Barclays but don't intend getting a mortgage from them as I can get much better deals elsewhere).

samuel248 wrote: »

I get the impression on some posts regarding this issue that some people have a "Oh well, that's banks for you. Never mind" attitude. Get a grip! If we the consumers don't stand up to potential breaches of contract (if they definitely don't intend breaking their contract why have they ammended the definition overnight?) then we deserve to be walked all over.

Not sure where you got that impression from. I've just re-read the thread and can't really see it.

samuel248 wrote: »

The "2% is a good deal so never mind" attitude doesn't cut it with me. Until today,Bar/Wool implied and stated that the BBB and the BoE rate was one and the same. They failed to suggest or imply that there ever would be any difference.

I don't think they have to tell you and me everything they might or might not do in the future. For a start, none of us know what is going to happen tomorrow do we? They can't unilaterally change deals they've already made but they can declare new terms for new deals in the future. I don't see much wrong with any bank doing that, in the same way as I don't see anything wrong with any customer looking at those deals and avoiding ones they think are bad.

samuel248

These are the quotes from the thread that I was refering to, amongst others:

"Are they obliged to carry on passing every part of an interest rate cut?
What obliges them to do so?
People can take their business elsewhere and should if they can get a better deal, but if the banks think the BoE is making a mistake they surely shouldn't be expected to copy that mistake. That would be irresponsible of them would it not?"
I don't want to get into an argument over who said what - if 've misinterpreted the aove then fair enough. The point I am trying to make is that we have to stand our ground, otherwise precent will be set for moving the goal posts whn it uits the financial institutions. Bar/Wool will be making enough money out of people who fixed over the last year or two and will be on rates of 5-6 % or more. I bet they have also been quick enough to reduce their savings rates!
I don't give a monkeys about Bar/Wool. As a customer I expect them to abide by their contract and not set the ground for wriggling out of it.

foreversummer

Just been through the terms & conditions which accompanied my mortgage offer which I received in September 2008:

31.4 If your Offer says the Interest Rate is, or is linked to, a rate which we control (such as Barclays Bank Base Rate), we may change the Interest Rate, or the rate to which it is linked. We may do this if, an any time:

(a) there is a change in Bank of England Base Rate; or

(b) there is a change in the cost of the funds we use in our mortgage lending business (or we reasonably expect that a change in funding cost is about to occur); or

(c) there is a change in Regulatory Requirements (or we reasonably expect that a change in Regulatory Requirements is about to occur).

From Mortgage Conditions (England and Wales) 2008 Edition.

Foreversummer