Alliance & Leicester Standard Variable Rate

VIGILANT22

A&L is a brand of Santander...

Dan_1976

They can do what they like, two companies really. They are a brand and it will be while before they are one.

A&L and Abbey are or were very different lenders with different costs, risks and mortgage books. So they have to price each one accordingly.

Thrugelmir

Mitnie wrote: »

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.

Unfortunately, and don't take this personally, you fall into a higher risk category as far as Santander is concerned. Risk is priced and reflected in interest rate charged.

beecher2

The Bank of Scotland still has a different SVR from Halifax and they've been the same group for years.

dvs

beecher2 wrote: »

The Bank of Scotland still has a different SVR from Halifax and they've been the same group for years.

But Bank of Scotland and Halifax operate separate brands although they are the same company. When A&L is rebranded Santander (rather than just being a part of Santander), they will have two SVR - one for Santander customers and one for Santander customers who originally had Alliance & Leicester mortgages.

I assumed that A&L customers would be moved to the Santander SVR but the letter I received today says they will operate two separate SVRs for customers once they intergrate the business. Unfortunately, that A&L SVR did not fall that much during the credit crunch and still has a rate that is 0.75% higher than Santander.

Thrugelmir

Rebranding the branches and products, doesn't mean that the legal company entities that currently exist will disappear.

Santander are effectively getting you to fund the administrative cost of transferring the mortgage to the new entity. By leaving mortgage rates higher its an obvious incentive.

Also will highlights borrowers who aren't financially strong, as they will have little choice but to remain.

dvs

Thrugelmir wrote: »

Rebranding the branches and products, doesn't mean that the legal company entities that currently exist will disappear.
.

Once customers are moved on to Santander's IT systems, they will be Santander customers and not A&L customers. There will be Santander customers on one SVR rate and Santander customers on another rate. What they do with A&L company is neither here nor there.

Thrugelmir

dvs wrote: »

Once customers are moved on to Santander's IT systems, they will be Santander customers and not A&L customers. There will be Santander customers on one SVR rate and Santander customers on another rate. What they do with A&L company is neither here nor there.

Who is your mortgage contract with? That is the answer to your question. Putting your contract details onto Santander's IT system doesn't change who you owe your mortgage to.

Legal entities aren't "rebranded" they have to be traded out in a systematic manner which often takes some years.

dvs

Thrugelmir wrote: »

Who is your mortgage contract with? That is the answer to your question. Putting your contract details onto Santander's IT system doesn't change who you owe your mortgage to.

Legal entities aren't "rebranded" they have to be traded out in a systematic manner which often takes some years.

Santander aren't simply rebranding the Alliance & Leicester. They are moving Alliance and Leicester customers to Santander. That is why they require the permission of the High Court. If they were simply rebranding, it would effectively be just a change of name. By moving customers from Alliance & Leicester to Santander they will be changing the legal entity. When Abbey was bought by Santander, they owned and eventually rebranded as Santander. Santander bought Alliance & Leicester and are going to transfer their customers to their business. They anticipate that most Alliance & Leicester cutomers will be transferred to Santander by the end of 2010.

Santander have said that once a customer moves on to Santander's IT systems they will be a Santander customer. However, the Alliance & Leicester mortgage contracts state that a customer will revert to the 'Standard Variable Rate' after their deal expires. If a customer has moved to Santander then the SVR would be that of Santander. However, Santander have said that existing Alliance & Leicester customers will now revert to what will be called the 'Alliance & Leicester Standard Variable Rate' rather than just the 'Standard Variable Rate'. So what Santander have done is to say that the your mortgage is now with us but instead of reverting to the SVR that we offer, you will revert to a different SVR that we will refer to as the Alliance & Leicester SVR. This will give them freedom to change the rate independently of their Standard Variable Rate.

Currently the Santander SVR is 4.24% and the A&L SVR is 4.99%.

MarkyMarkD

There is a precedent for this. Dunfermline Building Society borrowers are paying an SVR very significantly higher than Nationwide Building Society borrowers, even though Dunfermline is now just a trading name of Nationwide.