Rant!! Extortionate mortgage increase.

vet8

This is really just a rant. We have had a mortgage with UCB Home Loans for over 10 years and have always stuck with them because they have always given us very good deals. I change mortgage products every two years and at the moment we are on a tracker at 0.35% above base rate, so we are paying only £78 per month.:j
Unfortunately, this ends this month and their SVR is 4.99 which means our mortgage would go up to £531, almost 7 times as much!:eek: Meanwhile the base rate is 0.5% and the bank swop rate is at its lowest ever.

I contacted UCB to ask about another two year deal and they are only doing 2 years fixed, either at 5.29 with an arrangement fee at a rip-off £495 or 5.44 fixed. I thought the whole point about fixed rates was that they were usually lower than the SVR.

What really gets me about this is that there is no guarantee we would be able to get one of their "preferential" rates anyway, we have to be interviewed even though we have had a mortgage with them for years and never missed a payment. This is just a joke.

The headline in the Daily Telegraph today was how banks are ripping off people with their mortgage rates and I agree. I am not usually a believer in government interference, but instead of trying to micromanage our lives why does not this useless government do something about the banks. They take no risk in mortgage lending, as long as the loan is lower than the value of the house they cannot lose. (Our house is worth about 5 times the mortgage on it). If we default they just take the house. They are modern day Shylocks.

Anyway, rant over. I feel better now. I had better start trawling other mortgage companies. SIGH.

dunstonh

we have to be interviewed even though we have had a mortgage with them for years and never missed a payment. This is just a joke.

Its one of the risks of going with a lender that takes on high risk borrowers. Also, with respect, the rate of 4.99% is not bad for sub prime.

I thought the whole point about fixed rates was that they were usually lower than the SVR.

No. That is an incorrect assumption.

The headline in the Daily Telegraph today was how banks are ripping off people with their mortgage rates and I agree.

Of course you agree. The media love this sort of thing and whilst there is some truth in some areas there is also a lot of media driven misinformation and propaganda that means what they say is complete bull.

You are a high risk borrower with a high risk lender paying more to reflect that higher risk. You shouldnt expect to get deals that reflect prime lending. Although 4.99% is not far from the best prime rates anyway.

They take no risk in mortgage lending

Yes they do and in the case of UCB they take considerably more risk.

as long as the loan is lower than the value of the house they cannot lose.

The cost of repossession in a falling market can mean they can lose. Plus, banks dont like to repossess. It is a last resort.

I had better start trawling other mortgage companies.

Correct. If you are no longer sub prime or high risk then you should be free to shop around.

luckyfool

If you can prove your income and have good credit then you will have no trouble sourcing an alternate deal from a different lender. UCB are a Self Certification/Specialist lender and are shut to new business. The products they are offering you will have been priced based on that typical customer profile which is seen as being high risk, especially in the current climate.

vet8

dunstonh wrote: »

Its one of the risks of going with a lender that takes on high risk borrowers. Also, with respect, the rate of 4.99% is not bad for sub prime.

You are a high risk borrower with a high risk lender paying more to reflect that higher risk. You shouldnt expect to get deals that reflect prime lending. Although 4.99% is not far from the best prime rates anyway.

Correct. If you are no longer sub prime or high risk then you should be free to shop around.

We are not sub prime borrowers! cheek.!! We have had a UCB loan for years as originally we ran our own company and therefore could not provide independent proof of our earnings, but we earnt more than £50,000 per annum. But working for ourselves a lot of mortgage companies did not trust that.

We have a regular provable income now. I must say that over the years the rates UCB charge have been great, much better than most other lenders, until now that is.

I still say banks are in a win - win situation, yes repossession is a last resort, but they will get back most if not all of their money - they cannot lose.

opinions4u

vet8 wrote: »

Unfortunately, this ends this month and their SVR is 4.99 which means our mortgage would go up to £531, almost 7 times as much!:eek: Meanwhile the base rate is 0.5% and the bank swop rate is at its lowest ever.

Swap rates for terms of 3 years or longer are higher than they were a year ago. Mortgage funds aren't raised at BofE rate.

Linky

Has it crossed your mind that UCB need to reduce the size of the mortgage book in order to repay their wholesale funders? They want you to leave, so you should.

I contacted UCB to ask about another two year deal and they are only doing 2 years fixed, either at 5.29 with an arrangement fee at a rip-off £495 or 5.44 fixed. I thought the whole point about fixed rates was that they were usually lower than the SVR.

New one on me.

The headline in the Daily Telegraph today was how banks are ripping off people with their mortgage rates and I agree.

I would think UCB are probably losing £millions by being a mortgage provider at this point in time. I don't think lending money at a loss can be described as ripping customers off.

I am not usually a believer in government interference, but instead of trying to micromanage our lives why does not this useless government do something about the banks.

Let them go bust by forcing them to lose even more money? Kill off the key source of credit for the economy? I think you'll find that's a bit silly.

They take no risk in mortgage lending, as long as the loan is lower than the value of the house they cannot lose. (Our house is worth about 5 times the mortgage on it). If we default they just take the house.

If they lend money at a rate less than the cost of raising it they lose. If they have to repossess and a house is worth less than the debt they lose. Typical mainstream lenders have 20% of their customers in negative equity. I suspect UCB may be worse.

Anyway, rant over. I feel better now. I had better start trawling other mortgage companies. SIGH.

Great. If you feel hard done to that's exactly what you should do. I'd suggest taking a look at www.moneyfacts.co.uk as a good starting point.

While you understand value in terms of the family finances, you haven't really got a grasp on the economics of running a sub-prime mortgage lender in the middle of a Credit Crunch.

I still say banks are in a win - win situation, yes repossession is a last resort, but they will get back most if not all of their money - they cannot lose.

For fear of starting the pantomime season early, oh yes they can.

To quote LBG Retail's half year financial statement "The secured impairment charge increased by £334 million to £591 million". That means they've lost £591m on mortgage lending,

benjo

I still say banks are in a win - win situation, yes repossession is a last resort, but they will get back most if not all of their money - they cannot lose.

I have some sympathy regarding how much your mortgage payments will go up, but I dont agree with your reasoning Re; the above...

If the bank get most of their money back by repossession - but not all of it, how have they won? they have lost 'some' of their money.

If you go into a supermarket, buy your monthly shopping, pay for it, then somebody takes 10% of the items from your trolley - would you think you had won or lost out on the deal because you got to take home most if not all of your items?

davetrousers

Did you overpay much when you had only a £78 a month payment?

xmaslolly76

vet8 wrote: »

We are not sub prime borrowers! cheek.!! We have had a UCB loan for years as originally we ran our own company and therefore could not provide independent proof of our earnings, but we earnt more than £50,000 per annum. But working for ourselves a lot of mortgage companies did not trust that.

We have a regular provable income now. I must say that over the years the rates UCB charge have been great, much better than most other lenders, until now that is.

I still say banks are in a win - win situation, yes repossession is a last resort, but they will get back most if not all of their money - they cannot lose.

I think that first line is a little uncalled for the poster was only trying to be helpfull and point out a fact. At the end of the day UCB are classed as sub prime lenders as they lend to people who do not fit the high street criteria which you yourself stated above that you didnt at the time. Regardless of your income level sub prime can mean things other than you dont pay your debts on time or cant afford your mortgage!

From what you have said you should be able to find a good deal out there so good luck with that :-)

vet8

Thanks for your comments. It is amazing to see so many supporting the banks still!

I still maintain that banks have very little if anything to lose. Yes there are those who default on mortgages, but although I am no expert I would bet that most homeowners pay their mortgage and the banks make a pretty good profit on it, they would not do it otherwise. Even if they sell a repossessed house at a loss they have still made money over the years when the mortgage was paid.

I still maintain that if banks lend less than the house is worth, which they are doing at the moment they stand very little if any chance of losing out. Are they not asking for 25% deposit? Do you really think house prices will fall by that much?

Yes I will look elsewhere, but I am not all that happy as I have found UCB to be very helpful and very good over the years, much better that previous mortgage companies I have dealt with.

dunstonh

It is amazing to see so many supporting the banks still!

No its not. Many of the regulars in here have their own brains and are qualified and knowledgeable enough not to fall for the Daily Mail style rants.

The banks have a lot to answer for but there is no point being negative or sensational in areas that the banks have little or no control over.

I still maintain that banks have very little if anything to lose.

Despite all the losses they have been making?

Even if they sell a repossessed house at a loss they have still made money over the years when the mortgage was paid.

There would be some profit there but not much. They either have to pay savers or pay the investors that have financed them to be able to lend the money.

opinions4u

vet8 wrote: »

Thanks for your comments. It is amazing to see so many supporting the banks still!

They deserve a lot of the stick they get. But not all of it.

I still maintain that banks have very little if anything to lose.

That attitude effectively caused the Credit Crunch. The banks thought it, espeicially in America, lent to anybody and went in to meltdown as a result. The can and do lose.

Yes there are those who default on mortgages, but although I am no expert I would bet that most homeowners pay their mortgage and the banks make a pretty good profit on it, they would not do it otherwise. Even if they sell a repossessed house at a loss they have still made money over the years when the mortgage was paid.

A typical 2% per year margin is not much use when 2 years after lending somebody £100,000 you are repossessing a house worth £80,000. That's a big loss. The banks are seeing too many of these losses at the moment making mortgage lending barely profitable or unprofitable.

I still maintain that if banks lend less than the house is worth, which they are doing at the moment they stand very little if any chance of losing out. Are they not asking for 25% deposit? Do you really think house prices will fall by that much?

House prices have fallen by around 20%. If somebody borrowed £80k on a £100k house, missed £5k in payments by the time the respossession order was granted, then they would owe £85k. If the house fell in value to £80k the lender walks away with a loss of £5k before legal fees. Don't forget that the property needs managing once in possession too, so typical £3k in estate agent fees, standing charges and other costs on a modestly valued house.

If they'd been demanding 25% deposits a year ago, their losses now would be significantly smaller.