Fixed rate mortgage nightmares.

opinions4u

sean1881 wrote: »

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.

Yes, and had you done nothing and rates had shot up through the roof it would have been somebody else's fault too I assume.

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

Were you being tortured when you signed the form? Only silly people would agree to terms and conditions that they consider ludicrous.

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

Halifax have a current FTB 5 year fixed deal at 6.88% with a £495 fee. Would you like that one?

Look, this is simple: You decided to take a 5 year deal. They raised that money for you and lent it on to you. They are committed to pay the people they borrowed from at the rate negotiated. You are committed to repay them at the rate you agreed. They have priced in a get out clause for you.

I assmume you would be volunteering to get out of your fixed rate and increase your payments if interest rates had risen.

LizEstelle wrote: »

Fixed rates are absolutely nonsensical at the moment given what Libor and swap rates are doing.

Liz, LIBOR rates are for short term borrowing, not for 5 year fixed rates. And what, precisely, are Swap Rates doing? Try the linky. Ah yes, swap rates for 5 year fixed rate lending are 0.1% higher than a year ago. Lending risks are greater. Why would that make fixed rates cheaper now?

sean1881 wrote: »

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?

Why would you want a mortgage at all if you know you're being ripped off? Actually there are a wide range of fixed rate deals on the table. Some have smaller fees than others. Some have bigger ERCs priced in and offer a slightly lower rate as a result. There were trackers, discounts, capped, SVR, 2 year, 3year, 5 year, 10 year deals. Different prices, some with penalties, some without. A massive choice. You're just !!!!!! off becuase you guessed wrong a year ago.

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?

Because they still have to pay the rate they agreed to their wholesale funders, whether you still have the mortgage or not.

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.

Most of them disclose their status.

But your view is that rates fell and you should be allowed to bail out of the deal you agreed to. That seems a bit one sided to me. You signed the paperwork. The bank have stuck to their side of the bargain. What else did you expect?

dld2s

I'm on a 10 year fixed rate @ 4.99% yes it is a bit downheartening when you see rates as low as they are now and the redemption fees if you want to end it early to try and save some cash, especially when at the time we took ours out the govt were pushing for more people to take out long term mortgages at fixed rates, as others have stated if they rates had gone up we would have been sitting pretty, they didn't we aren't, tough luck for us, but frankly I can't blame the banks fo a decision I made, I took a bit of time to decide whether I should go for such a long deal and decided that the security of knowing what I would be paying for the next 10 year outweighed any gains I would make if the rates fell, surely this is one the main thoughts behind fixed rates for a lot of folk, I know it was for me.

sean1881

Still do not accept this.

Its a gamble I agree and I made a bad decision. However on balance, I guessed rates may have fluctuated a percentage point or so either way, however the 0.5 percent Bank of England rate is unprecedented and these are unprecedented times, so normal expectations go out of the window.

It seems that householders are up against it already, without effectively throwing away their hard earned, paying over the odds for an already very expensive mortgage.

It seems to be pot luck. My boss recently had his fixed rate deal end and walked straight into a new deal fixed for 3 years at 3.5 per cent!

People don't want to speculate about interest rates each month when they pay their mortgage. There is just too much at stake for most households. Thats why we fix our mortgages when we can.
People just want the security of owning their own house and to pay a fair price for doing so.

Despite all the arguments that have been made against my original post, I do not think that that is unreasonable.

opinions4u

sean1881 wrote: »

Still do not accept this.

Somehow I am not surprised.

Its a gamble I agree and I made a bad decision.

The game isn't over yet. When the five years are up you may yet have won your "gamble".

However on balance, I guessed rates may have fluctuated a percentage point or so either way

On what basis? Rates within the lifetime of my current mortgage hit 15.4%. So the fluctuation within the term of a mortgage can and often will be a damn sight more than 1%.

however the 0.5 percent Bank of England rate is unprecedented and these are unprecedented times

Unprecedented in the UK, but not in Japan. If the Bank of England rate had jumped to 10% would it be right for your lender to tell you that they've ripped up their agreement with you and they are going to charge you the 10% rate from the following month?

so normal expectations go out of the window.

Why?

It seems that householders are up against it already, without effectively throwing away their hard earned, paying over the odds for an already very expensive mortgage.

Take a 5 year fix now and it costs marginally more than it did a year ago. Actually, householders who have retained their incomes have benefited from reducing inflation, VAT cuts, lower rates (or the same fixed rates). Most householders are actually better off as a result of the measures taken to buy the nation out of recession. Bizarre but true.

It seems to be pot luck. My boss recently had his fixed rate deal end and walked straight into a new deal fixed for 3 years at 3.5 per cent!

In a previous post you said everybody charges the same. You can't have it both ways. What three year deal could you have taken out instead of your five year deal at the time you arranged it?

People don't want to speculate about interest rates each month when they pay their mortgage. There is just too much at stake for most households. Thats why we fix our mortgages when we can.

Great. Then take out a fix. Why do you not want to fix now? You got exactly what you wanted. Exactly what you paid for. One of the LOWEST EVER 5 year fixed rate mortgages ever available in this country. But hey, you think the big bad lenders are still ripping you off.

People just want the security of owning their own house and to pay a fair price for doing so.

Well it's a damn sight fairer than the 15.4% many other readers on this board will have paid in the 1990s.

Despite all the arguments that have been made against my original post, I do not think that that is unreasonable.

Look, if a shop stocks something that costs it £1 to put on the shelf, would you expect them to let you buy it for less?

If your answer is "yes" your are naive.

If your answer is "no" then why do you expect a bank to make a loss on a contract you willingly agreed to because you didn't want to speculate about interest rates each month and you wanted the security of knowing exactly what you were going to pay?

Your mortgage does exactly what it says on the tin. Exactly what you wanted at the time.

sean1881

I dont need a lecture about the 1989 crash. I purchased a flat way back in 1989 and paid those massive interest rates too. The flat cost 40k but after two years was valued at 13k and I was not allowed to sell it without agreeing to pay the lender the balance back in full at a rate of 25 per cent interest and only if the negative equity was paid back to them within 4 years. Please dont tell me about how the lenders carry the can.

After that I swore that I would never buy again, until unfortunately, 3 years ago my partner wanted us to buy a house. Just before another crash!

I am not naive, I think you are just too far bogged down in your bank manager mode to be in touch with what normal people feel about whats been happening over the past year.

I suggest we stop this now before it takes a turn for the worst.
I am entitled to my opinion and so are you but lets leave it like that.

LizEstelle

sammyjammy wrote: »

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.

When 'business' is shorthand for a cartel-like market stitch-up, anyone is entirely within their logical rights to get 'emotional'. The market is simply not working in a competitive sense and, in any other area, the Government's regulator would step in to order sort matters out. So where is 'Oflend' when you need it..?

The bland, pro-business dismissiveness of the lenders' apologists on this thread is jaw-droppingly complacent. You can bet this tone would be dropped in double quick time if they were about to get a mortgage or to remortgage. They would then see the name of the game in all its glory as it was about to affect them personally.

The difference between what lenders are paying for their funds and what they are offering in terms of fixed rates is at an all-time high and this should be put under a government microscope. We own half the industry, for God's sake.

MRSTITTLEMOUSE

I'm on a long term fixed rate and happy to be so.
I could of saved hundreds over the past year but I took a gamble and although it did'nt pay off I at least have the peace of mind in knowing I'm safe no matter what way the interest rates go.
That's what's important to me and worth paying the extra for.

dunstonh

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

Who is going to pay the investors for you wanting to back out of the deal you chose to buy? The bank still has to pay them. Who isnt if you are not going to?

You buy a fixed rate to get certainty of monthly repayment. Thats all. You dont buy a fixed rate to be on the cheapest deal possible.

tiff

MRSTITTLEMOUSE wrote: »

I'm on a long term fixed rate and happy to be so.
I could of saved hundreds over the past year but I took a gamble and although it did'nt pay off I at least have the peace of mind in knowing I'm safe no matter what way the interest rates go.
That's what's important to me and worth paying the extra for.

We fixed for 15 years in 2006 at 4.89%. I'm happy as a pig in sh...., its a low rate compared to historical rates. My DH almost lost his house in 1989 and went through a terrible time. The peace of mind we have knowing our payments wont change is priceless, it really is. The mortgage is also flexible in that we can overpay as much as we like as long as we leave £1 outstanding. Crazy deal, no doubt, but so glad we took it...

opinions4u

LizEstelle wrote: »

When 'business' is shorthand for a cartel-like market stitch-up, anyone is entirely within their logical rights to get 'emotional'. The market is simply not working in a competitive sense and, in any other area, the Government's regulator would step in to order sort matters out. So where is 'Oflend' when you need it..?

There is a pretty wide range of different rates and products even today. But you are right, the lack of funds to lend as a result of the Credit Crunch has distorted the market.

The bland, pro-business dismissiveness of the lenders' apologists on this thread is jaw-droppingly complacent.

It's not a case of being an apologist. Getting back to the original post, the OP wants to get out of a deal he agreed to because it now doesn't suit him. There is a price written in to the agreement that allows this, but despite agreeing to that a year ago he now thinks it's unfair. If a lender did the same they would be rightly lambasted and the regulators would come down heavily in them.

You can bet this tone would be dropped in double quick time if they were about to get a mortgage or to remortgage.

Odd that. I have taken a mortgage out rather recently. I signed the forms. I'll stick to the terms and conditions and I expect the other party to the agreement to do exactly that as well.

The difference between what lenders are paying for their funds and what they are offering in terms of fixed rates is at an all-time high

This is a myth. Banks don't borrow short term LIBOR rates and lend that money out at long term fixed rates. There's a Swap Rates link in one of my previous posts that explains very quickly that fixed rate funds are more expensive now than they were 12 months ago.

There is certainly a little bit of margin widening going on at the moment, but this will always happen when the risk of lending is higher.

and this should be put under a government microscope. We own half the industry, for God's sake.

Well let's be fair, HSBC, Barclays, Santander, Nationwide, Co-op and many others have no government ownership. Less than half of Lloyds is state owned. Only Northern Rock and RBS are more than half owned by UKFI.