MSE News: Skipton faces legal challenge over mortgage rate hike

ManAtHome

Not that much of a point:

"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"

So, we have an extrodinary event (World financial meltdown) covered by a clause in the agreement, but that shouldn't count as borrowers didn't expect any of the loan clauses to be invoked..?

inca_2

I can see it from both sides. From conversations with people working there it's a case of do or die for Skipton so from the point of view of not going under they have very little choice. However, I can see from a customer's point of view how it can cause anger. I don't think the rate itself is exactly high at under 5% but I guess it's the sudden increase in a time where some people are struggling as things are. As said above it's a complete catch 22 do you anger customers but stay afloat or do you keep your head down and go under? I know what most people in business would do. Although I feel for the customers I feel uneasy about the implications of Skipton losing here, although I don't see it happening but I'm no expert on these matters by any means.

sarahbennett

hallmark wrote: »

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..

I think it's for the judge rather than you to decide if they've "quite legally" raised their mortgage rate. Have you even read a Skipton BoE linked mortgage sold on the basis of a 3% guarantee above base rate....? If so I'm surprised you can be confident they are on the right side of the law

Nationwide's guarantee is 2% above base rate. They've quite legally kept to their guarantee. A clause that enables a building society to change its interest rate at any time for any reason at their entire discretion is an example of an unfair contract term, and is not enforceable.

The lawyers are so far taking this on on a no win no fee basis so they must be confident, given this firm's extensive experience with litigation...

Besides, if what Skipton have done really is quite legal, they should not have any fear of court action... and neither need anyone on this thread...

JPS29

hallmark wrote: »

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. You actually contradict yourself here, if their decision is legal and binding then how could we legally not pay?

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...

Actually before I took my mortgages i went to a whole of market broker. Skipton at the time were'nt actually the cheapest opiton (albeit by point something of a percent) but I listened to the advice of my mortgage advisor, and my accountant and what swung it for me was that I was going with a main stream building society with a good reputation. I opted for the company as well as the product as I didn't for one minute think I would get shafted, nor did my broker, equally if a mortgage was available from the co-operative I would have seriously looked at that as I would rather pay points of a percent more to be with a lender with morals.


My points above in blue

sarahbennett

hallmark wrote: »

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....

Incidentally, as a point of fact, a saver is not being screwed if they are offered a savings package with a low interest rate, as long as it is clear to them what they have signed up for and the company doesn't try to wriggle out of the arrangement.

On the other hand if they are offered a 25 year saving deal that tracks the Base Rate, plus say 2% (so it would now be at 2.5%) and they are given a guarantee that the interest rate on their savings would be at least 2% above the base rate at all times, and elsewhere it says only in exceptional circumstances could this ever be revoked... then they might be happy to get a lower rate of return while the base rate is low as long as they get a higher rate when it rises, suppose they were sold the long term vehicle on the basis it would enable them to instantly benefit from any rises in the base rate....

So there they are getting paid 2.5% for a few years... and gradually the base rate goes up, so it becomes 3%, 5%, 10%... and they feel pleased with their product, a year after the base rate hits an all time high so the interest on their savings finally becomes a meaningful amount, their Bank decides that a high base rate is itself an exceptional circumstance that gives them the right to lower the interest rate, in fact to set it at any rate they like.... it means the following month what would have been the money you had planned on spending on music lessons for your granddaughter or to help with the extra heating bills in a cold winter, this money evaporates. What makes it worse is that it is money you were promised. If their guarantee fell apart at a base rate of 7%, the bank could have easily made those calculations and set a ceiling on the amount you would get back as a saver, but you had bought a product without a ceiling. What you were told was exceptional was in fact an interest rate of 5% and that happened well over a year ago... without anyone telling you you were in exceptional circumstances........

Now that would be an example of savers getting screwed to the wall.....

hallmark

Savers not being screwed by low interest rates? OK now I know you must be joking.

Anyone who can't see how Brown is sacrificing savers in order to save reckless borrorowers either can't or won't understand the first thing about what's happening with our economy

Gorgeous_George

I sympathise with both sides.

If the borrowers lose they pay more for their homes. This will be approximately what the expected to pay when they took the deal or a little less. They have the option to walk free of penalty.

If the society loses they may go under. The administrators would probably call in the loans to pay creditors. No society and the worst possible outcome for borrowers.

Rock and a hard place I'm afraid.

Hallmark is right, savers are losing out. Again, the alternative of higher interest rates would see the economy collapse - probably never to recover in our lifetimes. It sure hurts to pay tax on savings when the interest rate is lower than RPI but savers would have nothing if Gordon Brown hadn't performed a modern day miracle in leading the World out of the mess created largely by the Americans.

GG

apt

I sharply disagree with Martin Lewis's quote 'This sort of irresponsible rate rise destroys any faith the public has in the mortgage system.' If Skipton's board and management think the society's finances are unsustainable then it would be irresponsible of them not to act. And if people are taking out a variable rate mortgage, but cannot cope with an interest rate of 5% then it is not a question of 'faith ... in the mortgage system', but of overborrowing. I would like to see how the money-grabbing lawyers will try to explain that the circumstances in the finance market have been ordinary.

hallmark

GB smugly took credit for 10 years of boom. The second the inevitable bust occurred he said that it was all down to "global" events.

Can't have it both ways no matter how much he'd like people to be duped.

Either it's global - in which case he is shown to be merely a puppet incapable of managing our economy. If the fate of the UK is solely down to global events then why not appoint a monkey as chancellor / PM?


Or it's not global - in which case he's fully culpable & as chancellor/PM for over 10 years is more to blame than anyone for the mess we're in.


Brown is criminally incompetent. He's not even bright enough to tell clever lies. Roll on the day we finally get the chance to get rid of him, he can't put it off forever much as he'd love to.

Dan_1976

I agree he has made a hash of our economy and we all fell for it. But you do know that no other party can run the country any better, I am not a red nose or blue nose or any other colour nose, I am worried that we have the best of a bad bunch!