Fixed rate mortgage nightmares.

sean1881

The thing that annoys me about all the talk of interest rates is that you only hear about the people that are currently benefitting. I recon the government want to try to convince us that we are all better off.

You will no doubt recall during summer 2008 interest rates were on the rise befor the Bank of England finally realised we were sliding into recession and started to lower them. Various so called experts including Alastair darling appeared on news programmes telling people who's fixed rate deals were comming to an end to sign up for a new fixed deal incase rates continued to rise.

My deal with the Halifax of 4.39 per cent, taken out on a new purchase in 2006 was due to end so I sought their best offer of 5.89 per cent and duly paid my £699 sign up fee.

I now find that if I had done nothing at all, had saved my £699, and simply gone onto the standard variable rate, which is currently £3.5 per cent I could have saved myself £350 per month in interest payments.

Furthermore I would not be facing the ludicrous redeption fee which are currently £5500, and which will still be £3500 in October 2011!

This is outrageous. Public owned banks like HBOS should be ordered to renegotiate fixed rate deals.

beecher

I wonder if you'll say the same thing when the SVR begins to climb again? 5.89% isn't that bad a deal, and it is swings and roundabouts really - those on trackers/SVRs are happy now, but they'll be on here bleating that the rates are outrageous once they go back to normal. You took a gamble, and it didn't pay off - can't see why the banks should renegotiate because you took the wrong guess.

Markyt

sean1881 wrote: »

This is outrageous. Public owned banks like HBOS should be ordered to renegotiate fixed rate deals.

If you could force them to renegotiate the deal when interest rates are in your favour, should they be able to do the same when the rates go against them? If not, why not?

sean1881

I don't really agree,

My point is, I am not an expert in fiscal dynamics. I rely on the advice of others. When so called experts appear on television programmes advising mere mortals such as myself that now would be a wise time to sign up for a new fixed deal, I can only assume they know what they are talking about. (Clearly with the benefit of hindsight we all realise that they did not).

I am surprised that you feel the banks should not renegotiate. The banks rarely suffer. It is always us tax payers and mortgage holders, or their front line staff that do that. Who got us into this mess?

I am also pretty sick of the so called experts who have been coming out of the woodwork in recent months claiming that they foresaw the bursting of the property market bubble way back in 2006. It's a shame they weren't as vocal back then!

Also even if I accept that I have to pay £350 per month more than I could have for my mortgage, how do they justify such extortionate redemption fees?

poppy10_2

sean1881 wrote: »

I am also pretty sick of the so called experts who have been coming out of the woodwork in recent months claiming that they foresaw the bursting of the property market bubble way back in 2006. It's a shame they weren't as vocal back then!

What? Did you ever read this board back in 2006? Or the myriad of other sites like http://housepricecrash.co.uk and http://globalhousepricecrash.com that were very vocal long before 2006?

This is outrageous. Public owned banks like HBOS should be ordered to renegotiate fixed rate deals.

No, they shouldn't. They are called fixed rate for a reason. Would you be happy if rates rose to 15% and they decided to 'renegotiate' upwards the rate they had agreed with you?

PeteHi

Nobody forced you to sign up to a fixed rate deal (btw your fixed rate is better than mine!).

Like everyone else has already said, when interest rates start to creep back up (and they will), then you won't be complaining will you?

I too wish I hadn't signed up for a fixed deal as its costing me £1250 a month and I'd be paying half that if I went onto the SVR and wouldnt have had to pay about £2k in fees and valuations. But the fee for getting off the fixed rate would cost me more than the saving would if interest rate are to go back up. Its not worth the risk/hassle.

Hindsight is a wonderful thing, but it was my choice and I'm stuck with it. I can't have it both ways.

WestonDave

As for banks rarely suffer - try claiming that with the banks that set up BoE -0.1% type trackers where they have money out on loan and are getting literally nothing back, not even something to pay for admin, let alone anything to cover the risk of default. Most financial decisions are a bit of a gamble - if you take a fixed rate you are anticipating that rates might go up so you avoid the risk of having to pay more than you can afford - however if they go down you lose out financially. If you take a variable rate you are anticipating rates probably going down so you share in the savings if they do, but if they go up more than you can afford then you lose your home.

In reality you are possibly financially worse off than you could have been if you'd taken the best possible decision, but you've actually only paid what you expected to and you haven't risked losing your home. There will always be winners and losers - one of the big saving graces of this recession is that people coming off fixed rates that cannot get another fix due to low equity have found themselves on low SVR's that have helped them rather than finishing them off!

_Andy_

sean1881 wrote: »

Also even if I accept that I have to pay £350 per month more than I could have for my mortgage, how do they justify such extortionate redemption fees?

If you felt the fees were 'extortionate', why did you take the mortgage with them to begin with?

LizEstelle

Fixed rates are absolutely nonsensical at the moment given what Libor and swap rates are doing. The OP is spot on.

Only people lucky enough to have been on trackers are getting real benefit out of the current situation... and they are looking at shocking increases in their monthly repayments when their tied periods finish.

I simply cannot understand why nobody is doing anything about this abusive, virtual cartel situation when HMG actually owns half of the lenders.

sean1881

I agree entirely with the last post. This is a virtual cartel situation.

The reply which says "If you thought the fees where ludicrous, why did you agree to them" amazes me totally. If all the banks offer basically very similar packages all with similar fees, then what choices do we have if we want mortgages?

I accept that settlement fees could be justified when the market is rising. For example if I wanted to sell my house that I was only able to buy because the bank was able to lend me the money and then went on to make , say £50k profit on it, then I would not resent paying two or three per cent of the mortgage value back as a settlement lump sum, but when people are often having to sell their houses and have already contemplated making a £20k+ loss, how can the banks justify increasing the pain even more by enforcing these fees?

I get the impression that many of the replies posted on this site are from bankers or mortgage advisers who are obviously going to be only too quick to squash any descenting voices.

sammyjammy

Its business ,you can't get emotional about it, you are the one who makes the decisions and you always have a choice, perhaps not an easy one but always.

You cannot expect a bank to run its business in terms of how their customers will "feel" about it.

If you didn't like the fees and everyone was charging the same you could have stayed on SVR.