Unfair mortgage rises from Northern Rock

NRUSH

Dear Money Saving Experts,

I have recently written to Northern Rock to complain about their seemingly unjustified mortgage rate rises relating to my variable rate mortgage. This rise is NOT in line with any change in the Bank of Englands rates since March 2009.

I have attached a copy of this letter below for perusal. Please skip to the bottom of this message before continuing.

I would like to understand the following if anybody can be of kind assistance,

- Is there a legal definition of a variable rate mortgage as I feel I have a case for misrepresentation? Do the FSA not regulate such activity considering Northern Rock's controversial banking history i.e. rate rises -> increased reposessions -> leading to government bail out? Their policy seems to be repeating previous poor business acumen which makes this "insane" for want of a better term.

- Does Northern Rock's behaviour breach banking guidelines and if so am I within my rights not to pay my mortgage until I am satisfied that there actions reflect only changes in the prevailing interest rate?

Thanking you kindly in advance for your support.

Yours respectfully,
NR

---

Dear Sir or Madame,

As a valued customer, I am querying the validity of the recent notification from you by letter, that my monthly mortgage payment will be rising by a substantial amount from just over £500 to £656.8. The current rate of interest (2.49%) is being superseded by a new rate of 4.77%. This is a rise of almost 50%!

I would like to draw your attention to the following page,

mortgages.co.uk/interest-rates/interest-rate-history - this clearly states that as of Jan 2010 there has been NO change in the Bank of England's base rate as of 7th January 2010. The base rate was held on January 7, 2010 at 0.5%, the lowest rate in UK history and has been at this rate since March 2009 as the graph clearly depicts.

Please could you highlight how such a change is valid? The very concept of a variable rate mortgage here is clearly being breached. I would also like to remind you that as Northern Rock is now nationalised it is effectively the people (and your customers) that own your institution, NOT the Government (whom represent the people), thus as a stakeholder in this organisation I have major concerns as to how this decision has been arrived at.

May I also remind you that by raising rates in this inappropriate fashion you are potentially pushing your customers towards re-posession by increasing the chances of both non-payment and lawful rebellion by your customers. If my memory serves me correctly, this was why Northern Rock had to be bailed out in the first place.

I will await your response eagerly before I seek legal advice and potentially take this matter further, either through the appropriate legal channels or by forming an on-line community of Northern Rock customers seeking similar explanation.

It is in your interest to treat this matter at the first opportunity.

Yours faithfully,

jamespmg44

If you are on the SVR of the bank, they can do what they want.

If you wanted something to reflect the BofE rate, you should have taken a tracker product.

Harsh as it may seem, you have no comeback on this.

dasilva_2

Not being funny, but they haven't altered their SVR. The 2.49% you are currently paying must be some sort of discounted deal that you are coming to the end of.

opinions4u

NRUSH wrote: »

- Is there a legal definition of a variable rate mortgage as I feel I have a case for misrepresentation?

No. They can vary the rate at their own discretion. You agreed to this when you took the mortgage out.

Do the FSA not regulate such activity considering Northern Rock's controversial banking history i.e. rate rises -> increased reposessions -> leading to government bail out?

They are regulated by the FSA. The FSA is not a price setting body.

Their policy seems to be repeating previous poor business acumen which makes this "insane" for want of a better term.

In what way is a higher SVR, which may well better reflect the higher risk of their loan book, poor business acumen?

- Does Northern Rock's behaviour breach banking guidelines and if so am I within my rights not to pay my mortgage until I am satisfied that there actions reflect only changes in the prevailing interest rate?

It breaches no rules. Protest that way and they will repossess your property and that will blight you financially for longer than a decade.

Thanking you kindly in advance for your support.

My apologies if my comments aren't supportive. I am, I believe, giving accurate and factual information. I'd make a poor politician!

---

As a valued customer

How do you define "valued"?

The current rate of interest (2.49%) is being superseded by a new rate of 4.77%. This is a rise of almost 50%!

It's not 50%. It's 92%.

mortgages.co.uk/interest-rates/interest-rate-history - this clearly states that as of Jan 2010 there has been NO change in the Bank of England's base rate as of 7th January 2010. The base rate was held on January 7, 2010 at 0.5%, the lowest rate in UK history and has been at this rate since March 2009 as the graph clearly depicts.

If your mortgage SVR has no contractual link to the BofE base rate this is simply not relevant.

Please could you highlight how such a change is valid?

Their mortgage book is losing them money. One way to stop this is to increase the price. Simple as that.

The very concept of a variable rate mortgage here is clearly being breached.

If it was a fixed mortgage I would agree with you. But by its nature a variable mortgage can and will vary.

I would also like to remind you that as Northern Rock is now nationalised it is effectively the people (and your customers) that own your institution, NOT the Government (whom represent the people), thus as a stakeholder in this organisation I have major concerns as to how this decision has been arrived at.

Taxpayers have a right to a return on the investment made on their behalf. Continuing losses should not be an option for this business.

May I also remind you that by raising rates in this inappropriate fashion you are potentially pushing your customers towards re-posession by increasing the chances of both non-payment

This SVR is lower than the one in place two years ago. So the mortgage is more affordable than it used to be.

and lawful rebellion by your customers.

They still have to pay their mortgages.

If my memory serves me correctly, this was why Northern Rock had to be bailed out in the first place.

Google "Credit Crunch" or check out Wiki for more detail.

I will await your response eagerly

They may pinch their ideas from my answers now.

before I seek legal advice and potentially take this matter further, either through the appropriate legal channels or by forming an on-line community of Northern Rock customers seeking similar explanation.

I wouldn't waste your time. I'd simply remortgage to another lender as soon as that is a cost effective option.

(there is a potentially trollesque nature to this thread, but I shall treat it at face value for now)

beecher2

NRUSH wrote: »

Dear Money Saving Experts,

As a valued customer, I am querying the validity of the recent notification from you by letter, that my monthly mortgage payment will be rising by a substantial amount from just over £500 to £656.8. The current rate of interest (2.49%) is being superseded by a new rate of 4.77%. This is a rise of almost 50%!

Your deal's come to an end - that's why. Look elsewhere for a new deal - problem solved.

ILW

OP, Please do not waste the OFTs time complaining that your discounted deal has ended. You will only be clogging up the system for people with a real issue.

_Andy_

Whinging moron - "ooh the bank's varied a variable rate as per the contract I agreed to. Oh boo hoo. Now I'm going to waste everyone's time by making a stupid invalid complaint about it."

"Consumer revenge" again of course.

VIGILANT22

[QUOTE=NRUSH

This is a wind up isn't it......:rotfl:

RecoveringAlcoholic

Complain about

The Fat Cats who created The Northern Wreck.


.

pfpf

4.77%? i have just posted up on this very forum with my own questions regarding my mortgage. i had to dig out and read all the paperwork regarding said mortgage to try and get over what i was asking and in doing so saw that in March 2008 our last mortgage before we moved away had an APR of 7.34%.

i do genuinely fear for people who are in the position where sub 5% APR's are going to lead to "reposession". scary times.

jamespmg44

pfpf wrote: »

4.77%? i have just posted up on this very forum with my own questions regarding my mortgage. i had to dig out and read all the paperwork regarding said mortgage to try and get over what i was asking and in doing so saw that in March 2008 our last mortgage before we moved away had an APR of 7.34%.

i do genuinely fear for people who are in the position where sub 5% APR's are going to lead to "reposession". scary times.

When we took our first mortgage in 2004 at 4.99% my dad said to be sure to factor in being able to afford repayments with a rate of 10%.

Anybody that could not afford to repay their mortgage on rates of 10% is taking a big gamble IMO and has probably borrowed beyond their means.