Chelsea mortgage rate?

oneandonlyboy

The banks dont have to pass on the cuts to its customers, thats their choice.
I know it sounds crap but thats business. You could choose to change lenders.

Jasperparrot

oneandonlyboy wrote: »

The banks dont have to pass on the cuts to its customers, thats their choice.
I know it sounds crap but thats business. You could choose to change lenders.

I fully understand the recapitalisation and the fact that it's their choice whether they pass on any rate reductions however why keep saying rates are being reviewed and that announcements are to be made shortly when nothing happens. I have three examples of such notices.

If they do not intend to pass it on then just say so. As for moving lenders then it's certainly a consideration but it's not exactly the best time to try (and The Chelsea know that)

oneandonlyboy

I think there are a few lenders like chelsea who know their customers cant change lenders and therefore have kept their rates the way they are. I know it doesnt seem fair
but with they way banks and people have been borrowing money the last 10 years its seems slightly fair how banks are being now.(thats just my view)

tim27w

I am a Chelsea BS customer on a fixed rate 5.49% that has just ended (Jan 09 payment). I have been calling them repeatedly asking if/when they change the SVR. No joy.

Noticed yesterday they are now offering a 3year fixed rate Mortgage at 4.29% for NEW customers only. Very annoying!

Alan_Cross

The Chelsea are generally an unmitigated shower.

I was in their Cheltenham branch a fortnight ago - ironically, just a mile from their HQ building. One cashier window open out of three. At least a dozen other people clearly 'working' in the branch, hurrying and scurrying hither and thither, doing nothing that I could identify as a recognisable activity.

Plush carpets, soft music and a coffee machine. A shame that all these people, including the manager presumably, took zero notice that the queue at the cashier was eight long, including an elderly gentleman struggling to keep balance with his walking cane, and that the customer at the window had been there for at least 20 minutes by the time I walked out in disgust.

Want to know where your 'rates' difference goes...? Look no further....

I have now closed my account with them.

samsuka

Hi,

I also enquired about their lack of movement in the SVR, as the BBC site shows that Chelsea has cut the least http://news.bbc.co.uk/1/hi/business/7829095.stm, only 1.15% compared to the overall 3.5% base rate cut, and has the 2nd higher SVR out of 20. I sent them a letter asking about this and they said they are committed to offering the best savings rates (despite the fact that others seem to be able to cut SVR's and offer competitive savings rates) and that they need to keep their capital ratio.

I then responded saying the government is about the cut the capital requirement ratio, which they then did, and that they also have an obligation to their mortgage customers, and just got a comment that they are passing my comments onto a higher power.

I took the SVR tracker on the understanding that it would track the Base Rate. While i didn't think it would track it 100%, i thought it would be better than the 33% of the base rate cut that they have done. This is consequently costing me hundreds of pounds as i could have gone with a lender who would track the base rate a little closer.

I guess the only thing we can do is continue to pressure them and continue writing them messages on their contact page. The woman i spoke to said lots of people have phoned up about it, so keep the pressure on i guess.

She said they aren't in financial trouble, and with the reduced capital ratios needed, they really don't have much excuse. Is it possible to go to a consumer watchdog or anything?

Thanks

S

Mithos

Compliant wise I don't think anyone has a leg to stand on. Most mortgage offers explain the product you are choosing and then it goes on to their SVR, it's ALWAYS a gamble as to what happens after the product finishes.

My guesses...

Chelsea suffered a (huge?) loss last year.

1) The Icelandic blunder, still no official word as to if they will get that money back according to their website.

2) The rapid changes to the base rate meant their tracker mortgages went to very low rates quickly. They have no floor as far as I can see.

3) Chelsea were lending in more risky ways, BTL's, commercial lending etc. They have completely withdrawn from them now, but they still must have thousands of customers who have BTL's on interest only basis, falling house prices and increasing LTV repossessions means heavy losses there too.

4) Chelsea are a building society and dependent on savers, falling interest rates means they have to offer less attractive savings accounts. Which in a simple world would mean its only fair to lower the mortgage rates, BUT I have a savings fixed rate bond until June paying 6.7%, possibly thousands of savers are in that fortunate position also. Chelsea are losing money there, even with a "high" SVR.

All of which means a higher SVR to oust borrowers to other providers, reducing mortgage books and only considering potential customers who have a good level of equity in the home.


There are most likely many other factors I've missed, and I do have sympathy for this frustrating situation some people are finding themselves in, but basic comments about "bank rate going down must mean SVR goes down" are just too simplistic.

Mithos

Just had a look at their website and notice they have some new Existing borrower products. The rates are fairly competitive I think, but the LTV is 65%.

I honestly don't think their SVR will be changing any time soon... not with this product being offered anyway; http://www.thechelsea.co.uk/mortgages/eb_product_022.html

MarkyMarkD

Mithos

The other factor you've missed is the FSCS levy which amounts to around 1% of savings balances (or 1% of mortgage balances). Whilst this should be borne by savers, as it's a result of savings at other institutions going wrong, in practice it is likely to be borne by SVR mortgage borrowers as they are the only ones who - at least to some extent - are not going to leave in the current climate. Savers can leave at the drop of a hat; tracker mortgage borrowers get the cuts whatever; fixed rate mortgage borrowers pay their fixed rate but the lender doesn't actually receive that because they've contracted to pay it away.

Those institutions which HAVE "passed on" rate cuts in their SVRs are not pricing realistically and they will be losing money this year as a result. Whether that's the right way to run your business is for each institution's directors to judge.

MarkyMarkD

samsuka

What are you saying about reduced capital ratios? I wasn't aware that there were any such changes benefiting Chelsea or any other building society.

It would be a good idea. But obviously, for that reason, there's no chance of this government doing it.

They've actually said that capital requirements should be counter-cyclical - i.e. higher when the economy is going well, and lower when it is going badly. But they don't mean to start from here with reduced requirements, they mean to increase the requirements when times get good again. So they will help matters in the NEXT recession, but not in the present one.