TMB raising SVR outside of rate rises...

mrlface

Yesterday I encountered a letter, well actually it was a notification, from my Mortgage company TMB advising that they are increasing the Standard Variable Rate on my mortgage even though there has not been a change in interest rate.

They put it down to "increased funding and capital costs of running your mortgage"

1) Can they do this as and when they feel like it or believe they have a rationale?
2) Are there any grounds on which I can refuse to accept the increase?
3) Are we likely to see other lenders doing similar things and are they within their rights?

I understand that under the circumstances and the current state of interest rates, lenders will not be getting the margins they once enjoyed but I cannot understand why yet again the banks don't have to take the rough with the smooth just like the rest of us.

Would welcome any thoughts possible actions.

Thanks

beecher2

Yes, they can do this.
There's no grounds on which you can refuse.
Bank of Scotland have raised their SVR from 1 November and yes, they're within their rights.
Your only option would be to see what deals they can offer you, or remortgage else where.

opinions4u

1 Yes.
2. No - but you could see if anybody else will lend you the money.
3. Possibly.

If you take a variable rate mortgage don't be surprised if a lender varies the rate.

Thrugelmir

mrlface wrote: »

Yesterday I encountered a letter, well actually it was a notification, from my Mortgage company TMB advising that they are increasing the Standard Variable Rate on my mortgage even though there has not been a change in interest rate.

Is your mortgage a tracker product. If it is then interest rates will move with BOE base.

If not, then the SVR will change in line with the increasing cost of raising money to fund mortgages.

HappyMJ

This in an increase from 4.84% to 4.95%. It's a very uncompetitive rate. I would consider switching elsewhere.

GMS

Standard Variable Rate (SVR) is purely at the discretion of the lender. It can be amended as and when they choose with no bearing on anything else. Some lenders did offer a guarantee that SVR would never be x% above Bank Base Rate but this was the exception rather than the rule.

The current rate of 0.5% has no bearing on costs of funding to lenders. Nobody can borrow at 0.5%.

Meeper

the banks don't have to take the rough with the smooth just like the rest of us

This is an interesting quote from the OP, and highlights the one-sidedness of the argument in reccent years.

Banks have a responsibility to their shareholders to deliver a desirable level of profit. The major shareholders in banks are individuals, like you and me, who invest in banks indirectly via pension funds, investments and so on. If the level of profit that a bank is able to make is reduced, then there will be a knock-on effect on people's investments, pensions, and so on. The bank will look like less of a viable proposition for investment, will be unable to generate new investment, and will fail, sending the economy into tailspin.

For the record, reviled companies like Lloyds Banking Group, who received a massive amount of governmental funding in the "bail-out" are more than capable of repaying the government's debt and have, in fact, offered to do so. The government have refused repayment of the debt at this time because it holds onto LBG shares, and they are waiting on the shares increasing in value so that they can profit. So, all of the negativity and hate for the banks might not be quite so well-founded.

opinions4u

I cannot understand why yet again the banks don't have to take the rough with the smooth just like the rest of us.

I suspect that most TMB borrowers got their mortgage in the good times.

In the bad times (like today) those mortgages aren't available to new borrowers.

So while a tiny increase in interest rate may annoy you, the reality is that the new rate is probably much lower than you would have been paying on their SVR pre-Credit Crunch and in many ways you were probably damned lucky to get a mortgage in the first place.

Thrugelmir

Meeper wrote: »

For the record, reviled companies like Lloyds Banking Group, who received a massive amount of governmental funding in the "bail-out" are more than capable of repaying the government's debt and have, in fact, offered to do so. The government have refused repayment of the debt at this time because it holds onto LBG shares, and they are waiting on the shares increasing in value so that they can profit. So, all of the negativity and hate for the banks might not be quite so well-founded.

Factually incorrect. The amount owed by the banks under the Special Liquidity Scheme has reduced from the original £185 billion to under £20 billion. As lenders have obtained the funds elsewhere. The cost of raising funds elsewhere is now feeding through to the cost of mortgages.

_Andy_

mrlface wrote: »

1) Can they do this as and when they feel like it or believe they have a rationale?
2) Are there any grounds on which I can refuse to accept the increase?
3) Are we likely to see other lenders doing similar things and are they within their rights?

1) Yes
2) None at all
3) Possibly

At the end of the day they exist to make money not be a charity.
Also bear in mind that the Bank of England base rate isn't the rate that lenders borrow at. And even if it was they're not obliged to cap their margin of profits.