Make them pass on interest rate cuts

Redfish_2

Mortgage lenders are finding ways not to pass on the full interest rate cuts in line with the Bank of England base rate...yet the purpose of the Bank of England Base rate cut is to put more money in consumers pockets. Our mortgage is with Mortgage Express and we were passed on all the rate cuts in full until the rate cut announced in December when we were only given a 0.16% cut instead of 1%, and then no cut at all on any of the subsequent Bank of England base rate cuts (January, February and now March). Our contract letter says we are on "a variable rate" discount of 1.21%. We looked on Mortgage Express's website where they have a glossary it states the following:

Bank Of England Base Rate: “…All Mortgage Express variable rates are linked directly to the Bank of England Base Rate.”

Discounted Rate: “A type of variable interest rate, with a percentage off a variable rate for an agreed period. Mortgage Express’ discounted variable rates are offered as a discount off the Product Variable Rate for a specific period.”

Product Variable Rate: “This is the default or go-to-rate for your Mortgage Express mortgage deal. When your fixed or discounted rate period ends the account will revert to the Product Variable Rate. Mortgage Express' PVR is linked to the Bank of England Base Rate.”

And there is no entry in the glossary for the term Standard Variable Rate.

According to the glossary which is their only published information on this then we would have to assume we are on the PVR with discount rate and that is linked to the Bank of England Base rate. We complained to Mortgage Express and their reply was: “As the Deed of Variation you signed clearly states in section 4 that it is a variable rate, this confirms it does not track the BoEBR as a PVR does”. The response to our complaint suggests that somehow we signed an agreement specifically for a Standard Variable Rate but does not substantiate this. The response explains that the SVR is a managed interest rate which means that it is set by the lender themselves and that there is no requirement for a SVR to track the Bank of England base rate in any way. But there is no disclosure of this particular nature of the Standard Variable Rate at all, either on their website glossary, or in our contract. As they are regulated by the FSA their information has to be clear and concise - in other words there must be full disclosure. Our argument is that they can't therefore try and obscure a rate which may or may not track the base rate with the words 'a variable rate'. What is clear and concise if you read their published glossary next to our contract is that we would be on a PVR which would mean we should get the full rate cut. We have made a complaint to the Financial Ombudsman to this effect.

In addition, Mortgage Express is now wholly owned by the government (the government is their only shareholder). And yet their actions in not passing on the interest rate cut undermines the goverment's aim with these Bank of England base rate cuts to put more money in the pockets of consumers. So we have written to our MP as well.

Anyone else in this position should also complain, it's about time we didn't let them get away with it.

Redfish

Wickedkitten

Does it mention a collar at all on your Key Facts Illustration that you got when you first signed up for the mortgage?

beecher

Wickedkitten wrote: »

Does it mention a collar at all on your Key Facts Illustration that you got when you first signed up for the mortgage?

The OP isn't on a tracker - they are on a variable rate.

Trying_to_be_good

You need to check the Key Facts and terms and conditions for your own mortgage deal, not what they are currently offering (which may be what's on the website now).

What does your own mortgage documentation state? Discount off SVR or PVR? Or something else altogether?

dunstonh

Its about time people realised that SVRs are not trackers and using a higher risk lender usually results in getting more expensive terms.