Chelsea mortgage rate?

MarkyMarkD

That's a sorry state of affairs. Many lenders offer the same deals to new, and existing, borrowers. A&L certainly made a point of it when I had my mortgage with them.

Unfortunately what you are talking about my not be "treating customers fairly" but it is Treating Customers Fairly, under the FSA definition, because that has nothing to do with this sort of "treating customers fairly". I.e. there's no regulatory rule that makes lenders offer any particular deal to any particular existing borrower. If there was, what Northern Rock has been doing - letting existing borrowers walk away whilst giving money away to new borrowers - wouldn't be allowed. It is not "fair", but it is "Fair".

sanatogen

sanatogen wrote: »

Jasper, that's interesting to know.

I'll get my "moan" about chelsea out in Youtube quickly.

That's my moan up on YouTube. It's very basic and perhaps needs a small edit to avoid ambiguity.

samsuka

sanatogen wrote: »

That's my moan up on YouTube. It's very basic and perhaps needs a small edit to avoid ambiguity.

Where? Post a link

Mithos

Jasperparrot wrote: »

Accept your point re comparing like for like. As it stands my LTV has gone over what most other borrowers would now want to take on based on falling house prices and lenders tightening up the lending criterea. Therefore I'm stuck with them for the time being.

However, my main point is if I was with another lender say C&G for example, my rate would have dropped regardless of the LTV based on the fact they've passed on recent cuts that Chelsea haven't.

As for your comment re TCF and comparing Chelsea's deals for new borrowers and existing borrowers then two examples are below, both up to 65% LTV.

New borrowers

2 Year fixed 3.39%
5 Year Fixed 4.29%

Existing borrowers

2 Year fixed 3.99%
5 Year Fixed 4.69%

SVR regardless of LTV 5.79%

Your argument isn't "like for like" here either, the lower rates have higher arrangement fee's.

Also in a previous post you forgot to mention after the last rate change the Chelsea ISA rates went up, mine by 0.40%.

I will happily defend Chelsea to the hilt, they aren't a bank and are only moderately, if at all, responsible for the problems we are all in now. "Profit" goes back into the society which is how all mutual building societies work. I honestly can't think of a proper reason why'd they want to "rip people off"???

Jasperparrot

OK, so lets compare the 'overall cost' for the two year fixed rate instead...

I can see there being a lot less work involved for Chelsea to offer a new deal to an existing borrower than to a new borrower therefore the difference in arrangement fees is probably justified.

The difference in fees on the 2 year fixed deal is £600 but the interest rate difference is 0.6%. You only need a mortgage of £100k to recoup the £600 in the first year. Over the course of the two year deal the new borrower is better off.

Please feel free to offer up a case for the defence.

Also, I'm pleased you've managed to find a savings account with an increased rate. While I admit to not looking at every savings account (as stated in my previous post) I don't think you can defend the fact that Chelsea's savings rates in general have dropped following BoE changes while borrowing rates have not moved. The Chelsea seem to justify saving rates dropping off the back of BoE changes but then ignore their lending rates. This doesn't seem to be the case with 90% of the other lenders.

MarkyMarkD

Of course Chelsea can defend the fact that their savings rates have fallen, and their borrowing rates have not moved.

As I've said previously (or should have if I haven't ) they have to pay a huge pile of money to the FSCS every year for at least the next three years; they have lost their shirt in Iceland; they are losing money on their existing tracker mortgages; they have increasing mortgage write-offs and will continue to do so through the recession.

Most of these points apply to every single mutual and quite a few banks too.

Some of them are simply going to report poor profits for the next few years; others are managing their businesses for the long-term and that means not reducing mortgage rates as much as would appear fair.

As Mithos says, it is hard for mutuals to "rip people off". All they are doing is moving money around between different members. Chelsea are ensuring that their reserves are not completely trashed, which would stop them continuing to exist to benefit future members (and existing members in the future). Other lenders are letting their reserves get trashed, which will prevent them from lending as much in future and quite likely lead to higher mortgage rates in the long run.

Mithos

Jasperparrot wrote: »

OK, so lets compare the 'overall cost' for the two year fixed rate instead...

I can see there being a lot less work involved for Chelsea to offer a new deal to an existing borrower than to a new borrower therefore the difference in arrangement fees is probably justified.

The difference in fees on the 2 year fixed deal is £600 but the interest rate difference is 0.6%. You only need a mortgage of £100k to recoup the £600 in the first year. Over the course of the two year deal the new borrower is better off.

Please feel free to offer up a case for the defence.

No what you say is fair. The only thing I could throw up is perhaps you had a beneficial "introductory" rate compared to existing borrowers at the time? But I'd be the first to agree its a poor reason when it comes down to it.

The mortgage rates for "good bet" customers have come down though, new customers and existing borrowers all seem to be hugely different to the SVR. Perhaps their SVR is now a version of a poor credit type mortgage, i.e anyone trapped on it must have a high LTV or some form of arrears on the mortgage in the past, thus to Chelsea they are a potential risk and the rate on offer is reflecting that.

The only reason I can think of for a high uncompetitive SVR is to either get rid of the customer or to try and amass capital for a possible problem further on. In the same way driving insurance premiums are higher for younger drivers.

petcorner

All I can say is that my husband left and although the mortgage has always been paid, about 5 years now, (he has been very good about paying maintenance) there is no way I can remortgage elsewhere as I don't earn enough. We aren't talking some kind of mansion either, just a 3 bed semi so even if I sold up I still couldn't buy anything. So I am trapped with the Chelsea and trying to grin and bear it even though my life with 2 sons would be a lot easier with a lower mortgage payment.