Nationwide "Collar" Clause

MarkyMarkD

Most people with mortgages are not in financial difficulties. Just because you have a debt - which was used to buy a valuable asset - does not make you in financial difficulties.

Most people with mortgages are in positive equity. Their mortgage payments have reduced by a large proportion - even if they are NOT on tracker rates, and if they are on trackers, even if they have a collar.

Many elderly savers have relatively small, fixed, incomes in the form of pensions or annuities. They depend on the interest earnings on their savings to live.

Is that all not obvious to you?

tartanterra

MarkyMarkD wrote: »

Most people with mortgages are not in financial difficulties. Just because you have a debt - which was used to buy a valuable asset - does not make you in financial difficulties.

Most people with mortgages are in positive equity. Their mortgage payments have reduced by a large proportion - even if they are NOT on tracker rates, and if they are on trackers, even if they have a collar.

Many elderly savers have relatively small, fixed, incomes in the form of pensions or annuities. They depend on the interest earnings on their savings to live.

Is that all not obvious to you?

The average wage in my town is £13K. The average houseprice - when houses were still selling - was £220K. Almost everyone I know around here, had to mortgage themselves to the hilt to get on the property ladder. Whilst mortgage payments may have gone down, (and I'm not sure how this seems to have passed you by) other bills, fuel, heating, etc. rocketed and companies are paying off left, right and centre due to a worlwide recession.

I am lucky to be paid a fantastic wage (I work away!), bought many years ago and paid my mortgage off. I have money in the bank, and while things may be good for me, I cannot say the same about my mortgage holding neighbours.

So frankly, no. I cannot see what is obvious about your point of view; it's simplistic and nonsensical.

MarkyMarkD

Nobody HAS to get on the property ladder. The average housebuyer does not earn the average salary - that's simplistic and nonsensical. The average housebuyer is a couple, earning more than twice the average salary between them - so maybe £30k, even in your town.

And the average FIRST TIME housebuyer doesn't buy the average house. They buy a starter home or a flat or whatever, for significantly less than the average house price. So maybe they might have spent £120k-£150k, not £220k.

After deducting a deposit - because MOST people save up something - you are left with a mortgage of say £110k-£140k. A £140k mortgage at 4%, repayment over 30 years, costs £668 per month or £8k a year - not a painful amount out of £30k of gross income between two people, and leaving a lot more money to live on than the average pensioner trying to survive on state pension plus the interest on say £20k of savings - just £600 (£12 a week) at 3%, but even worse at £400 (£8 a week) at 2%.

Does that mortgage customer need their £78 a month (£18 a week) saving more than that pensioner needs their extra £4 a week?

Because that's the question to which you are answering "no" and I am answering "yes".

Some other bills have gone up; others have gone up and down again. Petrol/diesel prices have fallen very significantly from their peak; gas and electricity are starting to come down again after peaking. Food prices are also starting to come down because of the recession.

But I don't see the relevance of those things - most of them affect pensioners as well as younger people. Heating costs all the more so.

grazer

Yes I do need my £78 a month saving because I'll be paying my mortgage for another 27 years and it really impacts my mortgage right now.

That, and I dont fall into your nicely selected set of figures for a 'standard' mortgage scenario that suit you so well.

We also have 4 kids, a huge shopping bill compared to the pensioners, a much lower income thats to the recession than your huge figure and no savings left.

So compared to your own personal financial circumstances, maybe you can see why we might be struggling to makes ends meet each month just the same as a flaming pensioner.

So stop using simplistic situations which suit your own ends and get a grip on reality.

As I said - you are making this argument while you are sitting on a no-collar mortgage - so you obviously have the same outlook as every other mortgage borrower - SAVE MONEY.

jenhugs

I don't get where you are coming from Markymark. You say most first time buyers buy a small house or flat (no not necessarily), and most people have some savings for a deposit on first house. Again no, and I think this is where things have partly been going wrong by the banks. Allowing people to take 100% mortgages and 8 x their salary, many people have also re-mortgaged and now they are in negative equity.

I think you are not seeing the whole picture, people are being laid off, and if not being laid off hours are being reduced to try and keep jobs. These mortgage reductions to the majority of people in this current climate is a blessing.

I am on an un-capped tracker with cheshire building society current rate we pay is 1.74% fantastic for us, however we are both living in fear of being made redundant at any time. Therefore we appreciate this at the moment as we don't know what the future holds.

jenhugs

And also seeing as we are generalising, don't most pensioners own their properties? Therefore they should have more money and a secure roof over their heads!!

tartanterra

MarkyMarkD wrote: »

Nobody HAS to get on the property ladder. The average housebuyer does not earn the average salary - that's simplistic and nonsensical. The average housebuyer is a couple, earning more than twice the average salary between them - so maybe £30k, even in your town.

And the average FIRST TIME housebuyer doesn't buy the average house. They buy a starter home or a flat or whatever, for significantly less than the average house price. So maybe they might have spent £120k-£150k, not £220k.

After deducting a deposit - because MOST people save up something - you are left with a mortgage of say £110k-£140k. A £140k mortgage at 4%, repayment over 30 years, costs £668 per month or £8k a year - not a painful amount out of £30k of gross income between two people, and leaving a lot more money to live on than the average pensioner trying to survive on state pension plus the interest on say £20k of savings - just £600 (£12 a week) at 3%, but even worse at £400 (£8 a week) at 2%.

Does that mortgage customer need their £78 a month (£18 a week) saving more than that pensioner needs their extra £4 a week?

Because that's the question to which you are answering "no" and I am answering "yes".

Some other bills have gone up; others have gone up and down again. Petrol/diesel prices have fallen very significantly from their peak; gas and electricity are starting to come down again after peaking. Food prices are also starting to come down because of the recession.

But I don't see the relevance of those things - most of them affect pensioners as well as younger people. Heating costs all the more so.

Most of my friends and neighbours are struggling with their mortgages and many are losing their jobs, that's a fact.
What your dishing out is sweeping generalisations with dodgy figures. The last two posters bear this out, as they are living the reality.

grazer

Anyone relying on the interest from saving to keep them going - help is at hand! This weeks moneysavingexpert email from Martin has a 'Question of the week' on this very subject - see the foot of the email.

So go and use this advice and lay off those of us enjoying this short period of lower interest payments on our mortgages.

MarkyMarkD

I think you misunderstand my point.

I'm not having a go at those who are enjoying paying lower rates on their mortgage. It's great.

But I'm having a go at those who claim that Nationwide (and other lenders) are unfair for having a collar (or conversely that they were right to temporarily waive it), and at those who claim that a collar is inherently unfair, and at those who have the deluded belief that their saving on their mortgage - due to their lender not having a collar - isn't coming out of savers' pockets, because it obviously IS.

HangTime

MarkyMarkD wrote: »

Most people with mortgages are NOT in financial difficulty. Most of them took out their mortgages with rates like 5%, 6% or even more. Paying 4% is great for them. Paying 3%, at the expense of old people who rely on their savings income to live, is simply ridiculous

Most people with savings sizeable enough to be significantly affected by a 1% interest rate cut are not in financial difficulty either. For it to affect weekly income by as much as £10, they'd need to have over £50k invested. And if they've got that much, given the fact that they are old, they can withdraw on that capital if needs be.

I don't go as far tartanterra, I mean to me it's not as cut and dried as to say people with debts are hard up and people with savings are well off; I probably fall somewhere in between your views.

One thing which we need to bear in mind however is that savings income is not a 'right'. If you sign up to a savings scheme which has a variable rate, then you have to live with the fact that it might change. And if you plan your future based on that, without any kind of contingency, then that's a risk you take.

I do agree however that collars should be obeyed.