mortgage company not reducing interest rates

nottsfiat07

Hi, New to this site, so sorry if anyone has posted about this before!

We have a mortgage with GE money which was originally on a reduced rate but has now gone onto their normal variable rate. Although in the past when interest rates have increased, we have had our mortgage payment go up whilst on this mortgage. However, although the bank of england rate has been cut 6 times in recent months, our mortgage rate has not gone down AT ALL during any of these falls. We have been looking into remortgaging and have rung GE money about this, to be told that their rates are not linked to the B of E rate changes and therefore basically they dont have to reduce their rate if they dont want to. This seems enormously unfair to me, as when rates have gone up in the past they have increased their rates. Does anyone know if this is right that they are able to pass on rate rises but completely ignore massive drops just because it means they get less money? It seems like this should be if not illegal, then at least morally wrong! Anyone have any info or experiences on this? Is there any wany of complaining? If so, to whom? Thanks!

Thriftysaver

Hi nottsfiat07

Do GE follow LIBOR as opposed to BOE. If so this is higher than BOE and they change it every three months.

Check the terms of your contract and see if your are on their variable or variable + a %. Check their terms. It maybe that their svr will not be more than 2% above libor.

HTH Thriftysaver

caracal_77

BBC has a nice comparison of mortgage lenders SVR rates (see table at the following link) http://news.bbc.co.uk/1/hi/business/7711689.stm
Seems like GE Money has the highest SVR in the market. It's up to them to decide whether to change their SVR or not, usually it isn't tied to any other rate (BoE or LIBOR).

opinions4u

nottsfiat07 wrote: »

Hi, New to this site, so sorry if anyone has posted about this before!

Welcome. It's a useful resource. Similar threads have been started before, but that doesn't prohibit you from asking again!

We have a mortgage with GE money which was originally on a reduced rate but has now gone onto their normal variable rate. Although in the past when interest rates have increased, we have had our mortgage payment go up whilst on this mortgage.

Sounds about right.

However, although the bank of england rate has been cut 6 times in recent months, our mortgage rate has not gone down AT ALL during any of these falls. We have been looking into remortgaging and have rung GE money about this, to be told that their rates are not linked to the B of E rate changes and therefore basically they dont have to reduce their rate if they dont want to. This seems enormously unfair to me, as when rates have gone up in the past they have increased their rates

While I would agree it is unfair, the mortgage itself is not a BofE tracker rate.

Does anyone know if this is right that they are able to pass on rate rises but completely ignore massive drops just because it means they get less money?

The amount of money they get is linked to the difference between what you pay to borrow it off them, and what they pay to borrow it off the wholesale markets. It is likely that their wholesale costs have not come down as fast as the BofE rate and, additionally, if they are experiencing more losses as people fail to pay their mortgages this will increase their costs. Ultimately it looks like you're paying for this.

It seems like this should be if not illegal

Why? When did they commit to following the Bank of England rate down? Even the Government's own lenders Northern Rock and Bradford & Bingley have failed to pass on all the reductions.

then at least morally wrong!

Wouldn't it be morally wrong for a business to lend money at a loss and cease trading as a result?

Anyone have any info or experiences on this? Is there any way of complaining? If so, to whom?

You could write to GE and complain. They can say sorry and ca

You could threaten to take it to the Ombudsman, but they won't listen to pricing complaints like this.

You could take legal advice to see if the interest rate could be classed as extortionate. You'd lose.

It may be worth posting the following information:
1) Your house value
2) Your mortgage debt
3) The amount of any other debts
4) Your annual salary
5) Details of any credit problems you've had

If (2) is less than 90% of (1) there may be the option of remortgaging. If not, I'm afraid they've got you by the gonads, but the rate most likely reflects their cost of raising the money they lend you and the quality (arrears and repossession rates) of their mortgage book rather than an immoral attempt to rip you off.

feisty1

Quote: It seems like this should be if not illegal, then at least morally wrong!

A Concise Explanation.........

GE Money are providers of specialist mortgages to people who do not qualify for a mainstream mortgage from lenders due to poor credit ratings. This means that there is a greater risk to the lender and therefore they charge a higher interest rate. The interest rate on adverse credit mortgages is often linked to the LIBOR (the London Inter Bank Offer Rate) which is the interest rate at which banks will lend money to each other. Therefore any change in the BoE base rate has no effect if yr rate is linked to the libor. So no it is neither immoral or illegal.