Alliance & Leicester Standard Variable Rate

green999

I have a mortgage with A&L which I took out 2 1/2 years ago. I am now on the SVR of 4.99%.

Up until a couple of months ago A&L were still offering mortgages with an initial fixed rate which then reverts to the SVR of 4.99%.

4.99% is higher than most high street lenders but I always hoped (naively) that when A&L sorted out their takeover by Santander they may wish to be more competitive in the market place and reduce their SVR to something more inline with the rest of the market therefore also reducing all their existing customers interest rates on the SVR in the process.

I now see from their website that for new customers they will go on the Abbey SVR of 4.24% and existing customers will stay on 4.99%!

How can one bank in effect have two standard variable rates? Will this continue when both Abbey & A&L are rebranded as Santander? Are existing customers subsidising new customers?

MB1919

There was a thread on this a while back. I'll be going on the A&L SVR in less than two weeks. I must say that I am more than a little angry that the Bank of Santander are running two SVRs. It's sod's law that we're both on the higher of the two. I can't see how they can sustain this indefinitely. All existing branches of Abbey, A&L and Bradford and Bingley will take on the Santander name by the end of 2010. By that time, I'd expect they'll be running with one SVR. Until then, A&L customers with high LTVs are stuck between a rock and a hard place.

Freshbeer

All new Abbey and A&L mortgages are now processed through the Santander system hence the harmonised SVR's. When A&L become integrated later on in 2010 you'll see the same SVR accross the board. In the meantime though, technically you can remortgage to Abbey from A&L and take advantage of the remortgage packages, or call A&L and see if you can get a new deal through retentions.

green999

Does that mean the A&L SVR will stay the same if base rates rise and the 2 rates will then both be the same at some point? or can I expect an over night drop of 0.75% in my interest rate some time next year if base rates stay the same?

MB1919

green999 wrote: »

Does that mean the A&L SVR will stay the same if base rates rise and the 2 rates will then both be the same at some point? or can I expect an over night drop of 0.75% in my interest rate some time next year if base rates stay the same?

That's a great question. I wish I knew the answer! Much will clearly depend on the BOE base rate. I don't see how anyone can know for sure at this stage.

Mitnie

I have the same issue as 'green999' (see 6:46 pm post of 19/11).

I contacted A&L on this point and they said the practice was legitimate since A&L and Abbey remain separate banks.

However, when I have enquired previously with A&L about preferential deals for existing customers, they have also spouted the mantra that all customers (i.e., existing and new) are required by the FSA rules to be treated equally.

However, this is not the case with their new mortgage offers based on the Abbey rates. This is because the terms and conditions of any new mortgage will specify a SVR of 4.24% which is significatly lower than the SVR of 4.99% which existing customers will have. Thus, existing and new customers are not be treated equally.

Thus, is A%L's practice legally sound?

Thrugelmir

Mitnie wrote: »

However, this is not the case with their new mortgage offers based on the Abbey rates. This is because the terms and conditions of any new mortgage will specify a SVR of 4.24% which is significatly lower than the SVR of 4.99% which existing customers will have. Thus, existing and new customers are not be treated equally.

Thus, is A%L's practice legally sound?

Lending criteria has changed over the past 12 months.

So the bank can argue that it has less risk exposure to new lending than old.

Being a customer does not grant the same rate of interest for all.

As a customer you have the freedom of choice. If you are unhappy walk away with your business.

Mitnie

Thrugelmir, that's the problem - as an existing customer I do not have the freedom of choice because my LTV is too high following house price falls.

camowen907

I am so glad that I am not the onlu one concerned and really angry over the fact that I have been paying 4.99% SVR on an A&L mortgage when they have been quoting a SVR of 4.2%.It is only recently that they have clarified it on their website that its for new abbey mortgages only. I have called and they said that they would be merged later in the year and my interest rate would be the same as abbeys. When i wrote to complain because i don't see how it is legal to advertise it as one thing but charge another i just got back a letter saying that it is legal and it says so in my t & c's, well i can't find it. I only hope that they do merge it soon and we are not left paying more to the bank than we need to. I would love to move lenders but unfortunatly i am in negative equity, so am stuck.

russell_hadd

I'm in the same boat - just hoping later in the year means sooner rather than later.

russell_hadd

I had a letter today about the merger and in the accompanying leaflet it states that from the "Effective Date we will refer to the Alliance & Leicester standard variable rate as the 'Alliance & Leicester Standard Variable Rate' ... Accordingly, the 'Alliance & Leicester Standard Variable Rate' may be different from the Santander standard variable rate".

So it seems that even after the full merger they will be operating two SVRs. I'm assuming that the Effective Date is the full merger or am I wrong?