Advice please re our mortgage rates

misterbarlow

Our mortgage has not gone down at all during all these recent rate cuts.
I emailed woolwich asking why, and the response was that the rates on its repayment mortgages are reviewed annually to allow customers to budget for the financial year.
Our mortgage is a lifetime tracker barclays base rate +0.69% which at the time we took it out was 6.19%, but now according to Barclays website the BBBR is currently 1% inline with BoE rate, but our payments have not come down at all!
The mortgage paperwork says a 1% increase would mean £87 to us, so considering that the rate has dropped about 5% lately this would make a massive difference to us of over £400pm, but they have not passed it on due to this 'annual review'.
Surely they should be passing this on to us automatically?

airbiscuits

Hi - I'm no expert, but i think they evaluate the rate every year around september and then the new rate applies a month or so later. But, that's the rate you'll pay every month for the next year.
You are still benefitting from the rate cuts - the rates are changing and you are now overpaying your mortgage. You'll probably see your payments reduce on the next review(september??)
If possible, it would be good to keep paying the same or at least above their stated amount and therefore still overpay the mortgage to reduce its term.
In my opinion, this annual payment works pretty good, because it also means that you have time to plan for any rising rates too! - as you're rates are fixed as interest rates rise!
I know that some people on this tracker have contacted the woolwich and asked for a review of their mortgage payments - to allign them with the rate changes! ( but i think this is probably only for interest only mortgages! - please check out yourself?)

-please don't quote me!
regards
dave

opinions4u

misterbarlow wrote: »

Our mortgage has not gone down at all during all these recent rate cuts.
I emailed woolwich asking why, and the response was that the rates on its repayment mortgages are reviewed annually to allow customers to budget for the financial year.

So you know exactly what you'll be paying for a full year, and they don't have to send out hundreds of thousands of letters every time there's an interest rate change. The latter being the reason for the scheme, but it would work the same if rates were going up.

Our mortgage is a lifetime tracker barclays base rate +0.69% which at the time we took it out was 6.19%

I think I am very jealous. Great deal!

but now according to Barclays website the BBBR is currently 1% inline with BoE rate, but our payments have not come down at all!

The rate they are charging you has fallen. Your payment at this point in time is paying off more capital. When they review things in September, you will see benefit from all the previous reductions AND from the additional repayments of capital you have been making.

The mortgage paperwork says a 1% increase would mean £87 to us, so considering that the rate has dropped about 5% lately this would make a massive difference to us of over £400pm, but they have not passed it on due to this 'annual review'.

You will have a very nice monthly payment come the Autumn.

The mortgage paperwork will also say that they will review your payment annually.

Surely they should be passing this on to us automatically?

As I said above, they have passed on the rate cut. It just won't impact your payment until September. If rates had shot up in recent months your payment would have stayed the same, until September, allowing you time to prepare for a rather unpleasant rise in mortgage costs.

My advice?

If your financial position hasn't changed and you could afford all your bills previously, do nothing - the benefits of rate cuts will come in their own time and are currently hidden in the size of your mortgage debt which is now lower than it would have been.

If you are genuinely struggling, ring them and ask them if they could bring the payment cut forward.

At whatever stage you do get a payment reduction I would strongly recommend looking at saving a large chunk of that reduction in to a Regular Saver account, or a cash ISA. That way when rates rise again you haven't got used to spending the money and you'll also have a tasty pot of cash to either reduce you mortgage debt (and future payments) with or treat yourself to something rather nice!