Beware: Five Million Tracker Mortgages at Risk

The_whistleblower

Dear Reader,
I am writing to you as a concerned industry insider.
If you are one of the millions of borrowers currently holding a so called “life-time, full-term, guaranteed”, tracker mortgage then please take note. If you are sitting smugly thinking that you have got nothing to worry about, then think again. This time last week, thousands of Norwich & Peterborough customers were in the same position as you are now and look what happened to them last week!
The Facts
· The Banks and the Building Societies are hard up cash wise. £200 billion has been pumped in by the Government into the black hole and they still need more.
· Out of approximately 11 million mortgages, 5 million are tracker based. This trend is going up.
· It is hurting the financial institutions very badly that these “Bank of England based+” Tracker mortgages are not making them enough money. The low interest rate environment will continue into 2010/11, so more pain for them.
· These institutions are not there to help you! They are there to make money for themselves and for the fat cat bonuses.
· I can tell you from the inside, that they are vigorously looking at ways to make changes to the tracker mortgages term and conditions. Most have hidden “the right to raise interest rates in exceptional circumstances conditions” in their small print.
· The Norwich & Peterborough “test-case”, this scrupulous building society is the first to blink.
· This Society has given its borrowers 10 working days notice, and will forcefully increase their “life term, Bank of England based” tracker mortgages by 300-400%.
· The others are watching like a pack of wolves ready to pounce, If this one gets away with it without a challenge the others will follow, I guarantee. A legal precedent will be set.
What does the Law say about this ?
I am glad to say we still have statutory laws to safeguard the consumer from these practices. But a law sitting on a shelf is no good to any borrower facing severe financial hardship. The Law has to be enforced, otherwise these financial companies will continue to flout the laws that safeguard the consumer.
I would like to draw your attention to two very relevant legislations. These are: Unfair Relationships, Enterprise Act 2002, within it, Part 8 has enforcement powers, which can seek redress. More recently a European wide law has come on to the statute books, namely Consumer Protection from Unfair Trading Regulations 2008.
The Office of Fair Trading (OFT) has been given the Powers to enforce these Laws. But the OFT will not act at the whim of a few complaints. They will only act if a significant number of people formally complain to them.
What can be done about this ?
· Kick up a huge fuss
· Get in touch with the Media, Norwich & Peterborough are trying to enforce these changes quietly through the back door over the busy Christmas period. Not a single news item has touched upon the significance of this story to millions.
· Inform the Treasury Select Committee members in Parliament. These are the MPs who are supposed to protect Public interest, and have passed these Laws.
· Get in touch with the Office of Fair Trading, they have the powers to act. Telephone number: 08457 22 44 99 or 020 7211 8000
· Inform the FSA (although a bit toothless)

Collectively the consumer will prevail, individually they will tick us off!

hillcats

Nah, surely not?
It is a contract, how can they just change something just because it is suddenly not all running in there favour?

Also, if they had these powers, then they wouldn't have let the mortgage holders repayments drop so low in the first place, they would've suddenly quoted paragraph X sub section X etc etc states blah blah.
They really should've considered this before making these types of mortgages available, and they certainly should've placed a floor limit / lower limit on the interest rate payable on the mortgage, IE It will not go below X% regardless of what happens to the BofE base rate.
Sorry, but they took the chance first.....

scrounger_2

I believe anything nowadays.

Gorgeous_George

This thread relates to the alleged move by N&P.

It would seem to be a logical move for the lenders. Comforted by their success with the bank charges fiasco, lenders will be looking for their next challenge to help fund their bonuses and Christmas parties.

I have two lifetime trackers so I shall watch this story with interest.

GG

kriss_boy

The OP just tells us what we already know- that anything can happen.

hillcats

hillcats wrote: »

Nah, surely not?
It is a contract, how can they just change something just because it is suddenly not all running in there favour?

Thinking about this further, what if the boot was on the other foot, (I'm sure it soon will be anyway) and rates went too high for people to be able to afford their repayments, and said to the lender, sorry I cant afford this, I want out of this deal, they would soon be quick enough to remind you that you have 2 years left on your tie in period, so you must continue with it.... or be repossessed . so they cant have there cake and damn well eat it as well....

Like I said, it a contract AGREED by both parties, if it is tied to the BofE base rate I would be sure there is absolutely didly squat they can do about it. If of course it is tied to their own base rate, then I think you are indeed at the mercy of your lender... <GULP>

poppy10_2

hillcats wrote: »

Nah, surely not?
It is a contract, how can they just change something just because it is suddenly not all running in there favour?

Thy seem to have covered themselves by using some very wooly wording in the contract to justify any potential future increases in the rate:

Thrugelmir wrote: »

Amongst the clauses that relate to variation of interest, these stand out:

(a) to meet relevant regulatory requirements.

(b) to reflect changes in the costs incurred by us in providing the Mortgage.

Very broad in wording with relevance to the current troubled financial times.

bclark

Norwich & Peterborough are a relatively small concern and market pressures have forced them into this.

It is incredibly unfortunate for their customers but I would be willing to bet that the bigger lenders would not risk the backlash of doing the same thing.

JasonLVC

bclark wrote: »

Norwich & Peterborough are a relatively small concern and market pressures have forced them into this.

It is incredibly unfortunate for their customers but I would be willing to bet that the bigger lenders would not risk the backlash of doing the same thing.

Why not?. It is usually the small fry that starts these things off and then the big boys come along and make a killing. Like the CEO of Lloyds is going to dismiss this on the basis that the public may have a dim view of bankers.....we're already there!

I'm surprised that MSE Martin hasn't commented on this potentially troubling development - not like him to miss an opportunity to kick the banks.:money:

Like all contracts and T&C's, the wording is likely to be ambiguous and the only way to get closure on such a matyter would be a civil court action for breach of contract - on the basis of unreasonable terms.

Kavanne

I have a standard life mortgage who have just been bought by Barclays... I am worried they will try something as my current rate is BoE BR + 0.75%

Gorgeous_George

Ok, I've just phoned N&P.

I am advised that in late 2004/2005 they introduced a floor for new tracker mortgages only. Mortgages taken before late 2004 have no floor and they are not introducing one. They said that they wouldn't be able to do that unless you move home or change products.

I hope that eases your concerns.

GG