Picture interest rate

Rafter

Banks are generally profit making organisations.

In the good times they make money out of sales and growth

In the bad time they make losses as a result of bad debts and charge existing customers more to try and recover those losses, knowing that those customers often don't have a choice to take their business elsewhere.

With 'variable' rates banks generally do follow base rate when competition is high - otherwise customers flee.

Unfortunately Andy is right - lenders can and do vary it on a whim - just ask any MBNA credit card customer who has seen their 'competitive' rate of say 12% baloon out to 30% plus.

R.

cyril82

on the other hand, if you have a variable rate loan, and in your terms of the loan that variation is suppossed to be linked or reflective in some way of the bank of england base rate and picture are putting rates up and not decreasing them when rates fall you may have cause to challenge your agreement as unfair under the unfair terms in consumer contract act 1999, which is different to the unenforceability challenges under consumer credt act legislation that spark such controrovosy.

This type of challenge should be researched and only taken on after sound legal advise or via the ombudsman if you fear you will suffer hardship as a result of unfair treatment as defined by the unfair terms in consumer contracts act.

if you're agreement is suppossed to track the base rate and it isn't i.e it didn't go down when the base rate did, a letter of protest mentioning that you feel they are not hounouring the contract and you feel their actions may well breach the unfair terms in consumer contracts act might be enough to make them pass it on a little.

I wouldn't get my hopes up but it might be worth a try.

_Andy_

sgianthebard wrote: »

Thanks for your opinion Andy. I don't agree with you though. Just because it is a variable loan, the lender isn't entitled to vary it on a whim surely?

Unless it is in the T&Cs of your agreement (e.g. it won't be X amount above base, or it is a base tracker), then yes they can.

There must be a reason for changing the rate and if they change the rate when bank interest rates go up, they should be expected to change the rate when bank interests go down.

No, there doesn't have to be a reason.

sgianthebard

cyril82 wrote: »

on the other hand, if you have a variable rate loan, and in your terms of the loan that variation is suppossed to be linked or reflective in some way of the bank of england base rate and picture are putting rates up and not decreasing them when rates fall you may have cause to challenge your agreement as unfair under the unfair terms in consumer contract act 1999, which is different to the unenforceability challenges under consumer credt act legislation that spark such controrovosy.

This type of challenge should be researched and only taken on after sound legal advise or via the ombudsman if you fear you will suffer hardship as a result of unfair treatment as defined by the unfair terms in consumer contracts act.

if you're agreement is suppossed to track the base rate and it isn't i.e it didn't go down when the base rate did, a letter of protest mentioning that you feel they are not hounouring the contract and you feel their actions may well breach the unfair terms in consumer contracts act might be enough to make them pass it on a little.

I wouldn't get my hopes up but it might be worth a try.

I'll certainly have a look at this. I may even send them a letter challenging them and see if they offer anything first. Thanks for the advice

sgianthebard

_Andy_ wrote: »

Unless it is in the T&Cs of your agreement (e.g. it won't be X amount above base, or it is a base tracker), then yes they can.



No, there doesn't have to be a reason.

That's a real bummer then.

~Brock~

Pictures rates and any variances to it will be a commercial decision based on a lot of factors.

I would imagine (although cannot be 100% sure) that the money that Picture lent out was secured themselves on the wholesale markets at a set interest rate, which means that they themselves are receiving no benefit from the BoE rate cuts.

They are also no longer lending themselves, but still incurring the costs of running the business to collect the debt, which I believe is not in the hands of a 3rd party company. This is likely to have played a part in the commerciality of their rates.

Also remember that they are hardly out to attract new business with their rates either.

As others have said, they are perfectly within their rights to increasde the rate on a variable rate agreement. The FSA do not regulate 2nd charge lending, so TCF rules do not generally apply.

Typhoon2000

Loan rates in general now are a lot higher than they were from mainstream lenders. 8.3% is actually quite low in todays climate and I doubt if you will able to get a loan from a regular bank for that.

samizdat

I don't know about your loan agreement but, in general, if you take out a variable rate loan, the idea is that if the rate becomes uncompetitive your remedy is to repay the loan early, e.g. by taking out another loan.

As others have said, the rate you are on is actually very competitive at the moment and, even if it were not, the general conditions in the market make it difficult for people to obtain new loans. Therefore, you may be unable to refinance it on better terms.

This may be painful but in my opinion this is exactly the nature of the risk that you took on when you took out the loan. It is irrelevant that Base Rate has gone down since you took out the loan (assuming there is no explicit tracking between your loan rate and Base Rate set out in the Loan Agreement).

Of course, you may not have had much choice about the terms of your loan when you took it out, in the sense that this loan may have been your only available loan. That is not necessarily your fault; but it is not Picture's fault either.