This can't be right

holliberri

Hi all
First timer, so please be kind! Have mortgage with Kensington ( probs getting good rate mortgage following divorce) for £110K. have switched to interest only in the meantime. Interest rate they are charging me is 7.25%!! on enquiry- they say that they do not follow bank of england rates - they follow "libor rate" - rate at which banks lend to other banks - surely this can't be right. All these cuts in interest rates and I'm still being asked to pay £660 on an interest only mortgage. Don't think I could move morgage providers easily... any ideas/guidance would be fab :mad:

holli

Trying_to_be_good

Is this the rate you signed up for with your mortgage offer? If so, then that's what they'll charge you. If not, tell us what it was you did sign up for and how this is different.

If you have a good credit history and decent loan-to-value ratio you can look to re-mortgage. If not, you're stuck with what you have signed up to until you can improve these two factors.

feisty1

holliberri wrote: »

Hi all
First timer, so please be kind! Have mortgage with Kensington ( probs getting good rate mortgage following divorce) for £110K. have switched to interest only in the meantime. Interest rate they are charging me is 7.25%!! on enquiry- they say that they do not follow bank of england rates - they follow "libor rate" - rate at which banks lend to other banks - surely this can't be right. All these cuts in interest rates and I'm still being asked to pay £660 on an interest only mortgage. Don't think I could move morgage providers easily... any ideas/guidance would be fab :mad: holli

Quote: "surely this can't be right"
I'm afraid it is, reason as given by Kensington

dunstonh

they say that they do not follow bank of england rates - they follow "libor rate" - rate at which banks lend to other banks - surely this can't be right.

Why cant it be right? A number of lenders lent based on LIBOR.

Don't think I could move morgage providers easily

In reality, that is the reason why you are being charged more. High risk borrowing comes at high risk cost. Kensington were typically used by those that couldnt get a mortgage with a conventional prime lender. When LIBOR rates were steady and low (they are low now but still volatile) they could afford to lower the rates on high risk lending to be not far off conventional lending. They cant do that at the moment.

Dan_1976

Yep, most lenders of this type lend on libor! In fact all lenders borrow and lend at these rates, hence the bank of england has had to be so extreme to make little impact!

The public need to realise the Bank of England base rate is not the be all and end all!