MSE News: Skipton faces legal challenge over mortgage rate hike

Former_MSE_Guy

"Skipton Building Society is facing a legal challenge and growing anger over its decision to hike its standard mortgage rate by a whopping 1.45 percentage points next month ..."

Read the full story:
Skipton faces legal challenge over mortgage rate hike

Gorgeous_George

The link worked ok for me.

An interesting but wholly expected development. I cannot believe that the case will be successful. If Skipton do not win it will almost certainly signal the end for many of our Building Societies.

I bet the legal business makes a profit. Any costs that Skipton incur will be recovered from their customers.

That said, I hope that the right side wins.

GG

JPS29

Hi George,

With regards to Skipton not winning and it being the end of all Building societies....

I actually undertstand why Skipton needs to impliment such clauses, but why couldn't they do as Nationwide have and honour existing contracts but change the rate on new deals. This way the new borrowers are 100% sure of what they are signing for. This would be the fair thing to do

If Nationwide can manage like this and not go down the pan, why not Skipton?

Gorgeous_George

I know what you mean.

The problem as I see it is that the smaller societies would need to implement rates so high for new borrowers that they would be uncompetitive and wouldn't attract new borrowers. Lower their rates and they fail to attract savers. a classic Catch 22 situation.

The ONLY way out is to hit all current customers a bit. It seems unfair but the alternative is for the society to go bankrupt and for the receivers to subsequently 'call in' all the mortgages.

GG

Dan_1976

You have to also look at the bigger picture. Skipton have other companies and interests. Connells and sequence, Amber and a few others. They have probably been stung like many companies and have had to look at ways to cut future risk and make money.

More lenders will do this and if they dont they could be in trouble.

ManAtHome

JPS29 wrote: »

If Nationwide can manage like this and not go down the pan, why not Skipton?

Supermarket syndrome - NW are around 14 times the size of Skipton, so can afford the 'loss-leader' longer (NW lost over £400 million last year on their BoE-linked mortgages).

hallmark

Lol, so it's OK for savers to be screwed to the wall with low interest rates, but if a BS quite legally raises it's mortgage rates people are scurrying to try to find some legal way of not honouring what they signed up to.

Ch-ching. If you make a bad decision, look for someone to sue so you don't have to pay for it. Nasty old building society lending you all that money so you could buy a house, bet they really had to twist your arm to get you to agree to that...

Gorgeous_George

That is a little unfair hallmark.

People signed up for a mortgage at an agreed rate. Skipton have increased that rate quoting some 'extraordinary' circumstances. And sure, the World's financial meltdown may be extraordinary but that doen't mean that the borrowers expected the small print clause to be invoked. It was unheard of.

I know it's half term but leave the grown-ups to have a rational discussion and you may learn something.

GG

edit to add: Oh, and lol

Dan_1976

As you say George the claus is in the contract and for all to see. It is there to protect the society in this type of situation.

If it was the other way around the borrower could invoke a clause pulling rates down in strange or unusual times we would be banging the consumer drum.

I agree its unfair but thats business.

hallmark

Gorgeous_George wrote: »

That is a little unfair hallmark.

People signed up for a mortgage at an agreed rate. Skipton have increased that rate quoting some 'extraordinary' circumstances. And sure, the World's financial meltdown may be extraordinary but that doen't mean that the borrowers expected the small print clause to be invoked. It was unheard of.

I know it's half term but leave the grown-ups to have a rational discussion and you may learn something.

GG

edit to add: Oh, and lol

All you can do is resort to insults & say it's ME that should leave the conversation to the grown-ups?

Is that the best you can do, it's rather sad if so.

What's the matter, are you one of the ones trying to wriggle out of their responsibility? Or do you just identify with the mentality that likes to blame anyone but themself for their misfortune?

Pretty pathetic either way.

pwllbwdr

Are YOU not going to address the point George made?