Accord Mortgages - Increasing SVR?!

Thrugelmir

BargainMad wrote: »

Yes I should have pointed out that Accord offer "prime" mortgages as well (such as the above fix) but the reason they can pitch their SVR higher than others is because a lot of their mortgage book is sub prime and their borrowers have large Loan to Values and/or have self certificated.

They know these borrowers can't move elsewhere and so can squeeze them with their SVR, although as I mentioned it is by no means the worst out there. Who knows, by March next year (when Accord goes up) there might be a few more lenders inching up their mortgage rates if they have no obligation to track the base rate.

They pitch their SVR higher because they have to, not because they can.

Base rate has no bearing on the cost of money in terms of mortgage funding. As its not what the actual cost to the banks is.

BOE base is rate that the banks receive for their overnight deposits with the BOE.

PayDay

milliemonster wrote: »

It might be because they're paying for my 3 year tracker at 0.39% above BOE 18 months ago, I'm pretty sure they didn't see that coming!

Don't worry, they will get that loss back from you at some stage. Gordon bailed out banks by borrowing yet more money. If you are paying taxes, claiming any benefits or working for the public sector, you will end up paying for that low rate.

LizEstelle

If Accord are in the position some allege, why would they have reduced any rates at all, as they did recently, with fixed rates, twice?

Surely this 'knowing you actually can't move from them' idea would motivate them to up or at least maintain rates at current levels. Why the inconsistency?

Pinklepurr

benjo wrote: »

Phew, had me worried, since my mortgage is with them, put in a 40% deposit, no defaults, ccj's, arrears etc and got a 4.69% fix for 5 years, which didnt feel like a sub prime rate - thanks for taking the time to clarify for me.

Yes, that comment had me worried too! I am also with Accord and one of their "Prime" customers (as far as I am aware). Currently on year 3 of a 5 year fix at 5.35%. No credit problems, low LTV and overpaying mortgage up to max of 10% each year, so well ahead of target repayment.

Thrugelmir

LizEstelle wrote: »

If Accord are in the position some allege, why would they have reduced any rates at all, as they did recently, with fixed rates, twice?

Accords fixed rates will be based on the fixed cost of money to them.

So the amount they lend on say a 3 year fixed term is mirrored by money deposited or raised on the same basis. This way they fix their gross profit margin, between income and expenditure.

LizEstelle

Thrugelmir wrote: »

Accords fixed rates will be based on the fixed cost of money to them.

So the amount they lend on say a 3 year fixed term is mirrored by money deposited or raised on the same basis. This way they fix their gross profit margin, between income and expenditure.

Ok, so their fixed rates are based on the 'fixed cost of the money to them'... and they wouldn't be swayed by the dramatically low return they're getting on existing trackers towards jacking up all other rates, knowing you 'can't move from them', as certain other posters have suggested.

opinions4u

LizEstelle wrote: »

Ok, so their fixed rates are based on the 'fixed cost of the money to them'... and they wouldn't be swayed by the dramatically low return they're getting on existing trackers towards jacking up all other rates, knowing you 'can't move from them', as certain other posters have suggested.

There might be something in this point.

It depends on how they have funded their tracker mortgages.

If it's with wholesale funds that track themselves, then it shouldn't impact. If they simply offer their customers a longer term tracker deal but raise their wholesale funds shorter term to back this lending then low margin trackers will currently be losing them money and I don't doubt that they would find ways to widen margins elsewhere in order to offset these losses.

Alan_Cross

opinions4u wrote: »

There might be something in this point.

It depends on how they have funded their tracker mortgages.

If it's with wholesale funds that track themselves, then it shouldn't impact. If they simply offer their customers a longer term tracker deal but raise their wholesale funds shorter term to back this lending then low margin trackers will currently be losing them money and I don't doubt that they would find ways to widen margins elsewhere in order to offset these losses.

... but obviously not on their fixed rates which have come down twice in the last month, which was her point.

It makes me think that their SVR is a favourite target for some reason. It also makes me think that their mortgage book is not in the straits some are alleging.

LizEstelle

So is Accord likely to drop its fixed rates further?

Presumably their 'prime' range is finally coming under competitive pressure from other lenders and this is why they've reduced to 'match' recently, in an effort to keep the existing prime customers which they need...?

patchman

Myssinic wrote: »

Received some wonderful news from Accord Mortgages today.. despite the LIBOR dropping and the continuing low interest rates, they've kindly decided to increase their Standard Variable Rate by 0.65% from 5.34 to 5.99%, adding £39.12pcm to the cost of our mortgage, although payments will commence from Mar 2010.

Obviously my first thought was "Well, thanks for nothing Gordon!!" Their SVR has been sky high anyway since rates dropped to 0.5%, but I wonder if we're now looking at the beginnings of a new trend not only in credit card rate hikes, but mortgages too. Christmas has indeed come early for the banks.

My second thought was of course of all you lovely MSE people with more knowledge than I could ever possess in this area Are there any grounds for disputing the rise, proforma letters to be sent, or do we just have to take this one sitting down? I'm guessing it's the latter. They've thoughtfully included that the rise is "in line with your Mortgage Loan Terms" despite the fact that they felt no need to adhere to them whilst the base rate was dropping...

Ah, for the day when I'm no longer owned by these thieving weasels...

where did you hear this from? i can't see anything on their site