Skipton BS faces Legal Challenge over raising rates...

doire_2

HAMISH_MCTAVISH wrote: »

I'm sure you don't.

Brilliant.

Sir_Humphrey

HAMISH_MCTAVISH wrote: »

Funny how Lloyds and Nationwide are managing to honour their 2% caps just fine, but Skipton can't honour a 3% cap......

Maybe those particular lenders aren't going bust? They are the big boys, Skipton are a small player.

HAMISH_MCTAVISH wrote: »

Bank/BS profiteering makes a mockery of the whole point of having low rates, which is to provide greater discretionary income for households, and permit spending to stimulate the economy.

That is what is called a liquidity trap, which is what I have been banging on about for years now.

It is morally wrong to renege on those deals, but that is not the practical point at hand. All I am saying is that whether they are moral or not, the outcome would be the same (or could in fact be worse). I can see myself starting to discuss utilitarianism versus the categorical imperative, so will restrain myself now!

blueboy43

HAMISH_MCTAVISH wrote: »

Funny how Lloyds and Nationwide are managing to honour their 2% caps just fine, but Skipton can't honour a 3% cap.....



It's not as though lenders have been hard done by either, with bank and BS margins at record highs.

But having a lender break a promise to cap a mortgage at 3% above base, and instead charge 4% or 5% above base on a whim, is certainly unfair to the borrower in my book.

People took out those mortgages based on a guarantee that bank margin would not exceed a certain level. Skipton tore up the guarantee, and should not be allowed to get away with it. Which would also set a precedent to make all the other small lenders that have done the same reverse their policy.

Bank/BS profiteering makes a mockery of the whole point of having low rates, which is to provide greater discretionary income for households, and permit spending to stimulate the economy.

You just don't get it do you. Low interest rates are designed to keep business investment up and help the banks rebuild their balance sheets by making decent profits. Propping up the housing market with all those on low SVR's is just an unfortunate side effect.

doire_2

When Skipton raised their rates the bulls dimissed them as a small player.

OK Skipton "broke a pledge" but its still a "small player" so how come the bulls now seem to care?

chucky

blueboy43 wrote: »

You just don't get it do you. Low interest rates are designed to keep business investment up and help the banks rebuild their balance sheets by making decent profits. Propping up the housing market with all those on low SVR's is just an unfortunate side effect.

most pessimists on here think it's because the Government has a vested interest and see it as a conspiracy against them ever owning a house.

they seem to be panicking and don't really understand how this economics stuff works but that's another story entirely.

Pennywise

Well I hope that the Skipton are allowed to use the exceptional circumstances clause for the benefit of all their other customers. If they have to make losses on the affected mortgages, they'll have to make up the money from elsewhere - that means other customers, or they'll go bust, meaning job losses etc.

I remember similar arguments about Equitable Life and their promised returns which they tried to get out of but lost the legal actions etc - the result was that far higher numbers of policyholders lost a lot of money, myself included, because we weren't the "fortunate few".

Sometimes, the wider view has to be considered, not just the few directly affected. The "exceptional circumstances" clause is there for a reason - It may not be good news for those affected but sometimes circumstances really are exceptional and when that happens, people have to compromise for the common good. Skipton should be allowed to do as they are wanting and then all Skipton customers will benefit in the long run.

Graham_Devon

Hang on Hamish.

You hail the bank bailout.

Yet condemn this building society using an exceptional circumstances clause, in exceptional circumstances, to keep afloat?

Hypocritical much? I know you want the lowest rates possible to keep your HPI dream going, but come on. Would you rather see Skipton simply fail? You have compared them to worldwide banks, it's not really a fair comparison.

danmck_2

As a Skipton mortgage customer, with 100% LTV, I am directly affected by this. However I'm trying to look at this objectively and can't work out the logic in this move.

1) Perhaps I am being naive but won't this decision simply lead to those with low LTV's (i.e. those least likely to default) leaving, and end up with Skipton with only customers who owe a lot and have little/no equity?

2) Isn't a lot of people paying 3.5% (the majority presumably a very low risk) better than a relatively small amount of people paying 4.95% (who are riskier)?

3) Is the point of this to reduce the total amount of money loaned out? Have the Skipton just caused themselves a load of negative publicity (and potentially legal recourse) for little to no reward?

Sir_Humphrey

danmck wrote: »

As a Skipton mortgage customer, with 100% LTV, I am directly affected by this. However I'm trying to look at this objectively and can't work out the logic in this move.

1) Perhaps I am being naive but won't this decision simply lead to those with low LTV's (i.e. those least likely to default) leaving, and end up with Skipton with only customers who owe a lot and have little/no equity?

2) Isn't a lot of people paying 3.5% (the majority presumably a very low risk) better than a relatively small amount of people paying 4.95% (who are riskier)?

3) Is the point of this to reduce the total amount of money loaned out? Have the Skipton just caused themselves a load of negative publicity (and potentially legal recourse) for little to no reward?

Skipton will realise this, which suggests they are in proper trouble, and you will be paying a higher SVR soon in any case. Regarding 2), if their current situation would lead to closure anyway, then there is no possible worse outcome for them.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Hang on Hamish.

You hail the bank bailout.

Yet condemn this building society using an exceptional circumstances clause, in exceptional circumstances, to keep afloat?

Hypocritical much? I know you want the lowest rates possible to keep your HPI dream going, but come on. Would you rather see Skipton simply fail? You have compared them to worldwide banks, it's not really a fair comparison.

Hang on Graham.

You advocate letting businesses fail, to be swallowed up by bigger businesses, (as has happened with numerous other small building societies).

But now you are in favour of sh1tting on the consumer, so a business can make more profit?

Hypocritical much?

The reality is, if it is proved that the rate cap is part of the mortgage contract, then if Skipton fails, any buyer of Skipton will have to honour the contract.