woolwich mortgages changing SVR massively

Thrugelmir

The Woolwich's SVR was set at 4.99% wef 1st March 2009. Less than 3% of Woolwich's borrowers are on this rate.

You should try and remortgage onto another of their products.

chivers1977

I think that this is so that there is a definite link between base rate and SVR whereas previously the T&Cs have just stated that the SVR can be changed when the directors decide (in so many words). I'm off work for Christmas so can't check. This will mean that it should increase when the BBR does and decrease when it does. As has been stated above this will not affect the current SVR which is 4.99 or any tracker products but will make an impact when the rate rises.

Does the letter state that you will be released from your fixed rate if you are not satisfied as this would be unusual........

How it will affect you:

If you have a fixed rate, check your offer as most customers now revert to a tracker rate and not SVR.

If you have a flexible mortgage (tracker or fixed rate) with a debit balance drawn down on your Mortgage Current Account, this will affect your reserve interest rate.

If you have a tracker main mortgage (whether offset or flexible tracker) this will not affect your main mortgage.

If your mortgage is already on SVR then, it will affect you.

IF you have Offset, this will not affect you at all...

Let_Us_See

Difficult to comment until the situation is cleared, is it possible for anyone to attach, or type to a post?

There seems to be a confusion regarding SVR and BBBR. A lender can set their SVR at any level. Historically, SVR vaguely followed changes in the Bank of England base rate, although lenders often turned a blind eye to cuts in interest rates. Until the emergence of the base tracker, almost all fixed, discounted or capped mortgages schemes reverted to SVR.

Now we have the all singing and dancing base tracker which, for good reason, has virtually totally replaced the discounted mortgage. Lenders used the base tracker option, based on the Bank of England (BOE) base rate, as it provided (at the time) a steadier variable rate, reflected the cost of borrowing (for lenders) in the money market, and was easier for applicants to understand. All round winner, until BOE base rate crashed. Now many borrowers are enjoying very low reversionary base interest rates, were previously they would have reverted to a lenders SVR.

This now brings us back to the Woolwich. As someone has pointed out BBBR (Barclay's Bank Base Rate) is their version of the BOE base rate and has in the past exactly mirrored any changes in BOE base rate. Consequently, they are losing a small fortune on these schemes, until they thought to increase the BBBR to stop bleeding away profit. If the mortgage offer stated it would revert to BOE base rate, then there is probably nothing the Woolwich could have done, but by stating it would revert to BBBR, then they can change the rate as they see fit - very much like a lender's SVR. Is it despicable - sure it is! Is it illegal - shouldn't think so.

savingholmes

I will let you know what Barclays say in the morning when I speak to them - but thanks for posting, the letter is two and half pages of legalese so can't really post it...

samba

Let_Us_See wrote: »

This now brings us back to the Woolwich. As someone has pointed out BBBR (Barclay's Bank Base Rate) is their version of the BOE base rate and has in the past exactly mirrored any changes in BOE base rate. Consequently, they are losing a small fortune on these schemes, until they thought to increase the BBBR to stop bleeding away profit. If the mortgage offer stated it would revert to BOE base rate, then there is probably nothing the Woolwich could have done, but by stating it would revert to BBBR, then they can change the rate as they see fit - very much like a lender's SVR. Is it despicable - sure it is! Is it illegal - shouldn't think so.

The letter says that the SVR will follow the Bank of England Base Rate, not the Barclays Bank Base Rate, which afaik isn't being hiked as you suggest.

As regards the BBBR, this has been discussed before, but historically it has always followed the BoE Base Rate. There is no guarrantee that it will do in the future, although it is extremely difficult for it not do so, as there are many many tracker mortgage customers who like me received an addendum to their KFI/offer that states categorically that all references to the BBBR in the offer should be read as BoE Base Rate.

savingholmes

Hi all I have just spoken to Barclays on the information line. Apparently this will only affect you if you have been using your mortgage reserve - so is most likely to affect offset or open plan type mortgages - where you can pay some off and then borrow it back if you want to. We haven't used our mortgage reserve so this won't apply to us. Our main mortgage is unaffected - and should therefore still drop massively when our fixed rate ends!

Let_Us_See

The letter says that the SVR will follow the Bank of England Base Rate, not the Barclays Bank Base Rate, which afaik isn't being hiked as you suggest.

I have not seen the letter and there appears to be some confusion as to exactly what the Woolwich is proposing. I didn't state the Woolwich were hiking rates, that was the theme of the original post.

By Savingholmes

Hi all I have just spoken to Barclays on the information line. Apparently this will only affect you if you have been using your mortgage reserve - so is most likely to affect offset or open plan type mortgages - where you can pay some off and then borrow it back if you want to. We haven't used our mortgage reserve so this won't apply to us. Our main mortgage is unaffected - and should therefore still drop massively when our fixed rate ends!

Ah well... as so often happens on this forum the truth turns out to be so simple.

joolley

My reserve has the same rate as my offset mortgage ie BBBR +0.99% now 1.49%. The SVR does not currently apply to the reserve of offst mortgages and this letter does not say that this will change. If it does I'm moving!

savingholmes

hi joolley - Hope your mortgage is okay then. I am just grateful mine in - panic over for me!

joolley

SH, I hope so. Mind you, the 4.99% would still be a good rate for a 'loan' which is what the use of the reserve is anyway. What's concerning is the explicit statement that the SVR will now track the BOE rate and not the BBBR. Is this paving the way for the BBBR to move away from the BOE rate? My mortgage is 0.99 above BBBR. I knew that there was a possibility that BBBR = BOE would not always continue even though it has for 7 years. But this statement is the first time Barclays has made reference to BOE and not BBBR. Hmmm

Again, I'd move mortgage if this changed. I have 45% LTV, mortgage 1 1/2 times joint salaries. I'm offsky the minute Barclays is less than competitive.

joolley