MSE News: Lloyds hikes standard mortgage costs

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"The UK's biggest mortgage lender is scrapping its ultra-low standard variable rate for new borrowers ..."

Read the full story:

Lloyds hikes standard mortgage costs

payless

more reason for consumers to be careful and check "follow on rates" when taking a new mortgage or a remortgage ... a good adviser will ( should) look at this issue , but maybe easy to overlook when just looking at "best buy" tables

Thrugelmir

Certainly a rapidly changing market, with Nationwides announcement last week. Perhaps a time to lock into long term fixed rates.

Gorgeous_George

Thrugelmir wrote: »

Certainly a rapidly changing market, with Nationwides announcement last week. Perhaps a time to lock into long term fixed rates.

Hardly.

It is just an understanding reaction to the extraordinary low base rates. If LloydsTSB (and Nationwide for that matter) thought base rates were likely to rise within the next three years there'd be little value in introducing the new SVR (and risking bad publicity).

I can understand mortgage brokers advising people to take new mortgages but I wouldn't panic just yet. Wait until after the budget when the ConDems' honeymoon will be well and truely over.

GG

property.advert

They are taking the mickey with this rip off. They are also relying on consumer inertia.

It just makes it all the more appropriate to apportion the rapidly rising fees over only the deal period, not your intended remortgage period. For small mortgages, that means quite a hike in the effective rate, less so on larger mortgages.

For example, a £999 fee on a £65k mortgage at 2.49% for 2 years is really an effective rate of 3.26% (interest only). Your average consumer will never notice this and they will be put off moving mortgage as they don't want to pay or don't have the new high fees.

Gorgeous_George

property.advert wrote: »

They are taking the mickey with this rip off. They are also relying on consumer inertia.

I guess we disagree. I really cannot see a 'rip off' here.

It only applies to new customers and unless base rates are still below 3.5% in two years' time, nobody will be affected.

And as for customer inertia, any customer doing nothing will NOT be affected.

GG

Cannon_Fodder

Gorgeous_George wrote: »

If LloydsTSB (and Nationwide for that matter) thought base rates were likely to rise within the next three years there'd be little value in introducing the new SVR (and risking bad publicity).

Gorgeous_George wrote: »

...unless base rates are still below 3.5% in two years' time, nobody will be affected.

I'm confused, GG.

You seem to say its pretty likely the base rate won't increase in the first comment, but in the second comment that no-one will be affected unless rates stay under 3.5% ?

So, some people will be affected, either because rates have stood still and its not a great follow on rate, or directly by rising rates...

(agree its not worthy of being classed a rip-off, just confused by the seemingly contrary comments)

I may have misunderstood.

Do Lenders really care about bad publicity? If they are out of cash, or its too expensive to borrow, or they have sufficient exposure or whatever else really led them to do it, then don't they have to do it, regardless of the publicity ?

From a laymans point of view, I'd have thought getting a high SVR in place is preparation for a future shift to Fixed deals. As you say, if everybody does nothing, they don't get that SVR...so logic says to me that they expect people to have to switch - or feel they have to.

Waiting for the budget is an ok idea, but if there's anything in it that makes it particularly obvious where things will head, won't the Lenders quickly issue products/Ts&Cs to accomodate, withdrawing the last of the good deals ?

Henry_P_Chester

I'm afraid will we start to see a lot more lenders do this as the governments special liquidity scheme for banks ends. The can't afford borrow money in the open market as cheaply as they were getting off the government. I wouldn't be suprised it if we start to see high LTV mortgages mortgages phased out too as they can not afford to take any risks when margins will be so tight in the future. Now a couple of lenders have done it, it will be a cue for the rest too.

Regardless of base rate will all be paying more on mortgages soon.

ILW

Despite the low BoE rate, banks are finding more difficult to source money at low cost. They are needing to attract savers cash and I believe they will need to increase the rates they charge to new and existing borrowers wherever they can.