Can a mortgage withdraw bank base rate guarantee just like that ?

getmore4less

I think the issue here is not that they can change(contract allows for that) but if the change is fare.


I would think that a new base rate tracker or a collar would be fare but that this new SVR tracker is not.

There are offers around from other lenders at base + 2% so if they can make money on those that should be resonable max under Exceptional change clauses.

If you don't like the change then you should be able to move penalty free and have a reasonable time to do it say 3 months

Gromitt

jk38 wrote: »

I think what I feel is wrong, is that I signed up for a BBR plus 1% (yes I read the contract) and in doing so took the chance that the BBR would stay at a 'reasonable' percentage....it hasn't always been low...... and believe me they made plenty from me when the rates were high over the years

Well, can you move your business elsewhere? Perhaps you have paid enough off now to get a better deal due to a lower LTV? No one stays on the same mortgage until they have finished paying it off. They up and move when it makes sense to do so. For example, if your MTG is now 60%, HSBC do a BOEBR+1.89%.

shortchanged_2

Gromitt wrote: »

Well, can you move your business elsewhere? Perhaps you have paid enough off now to get a better deal due to a lower LTV? No one stays on the same mortgage until they have finished paying it off. They up and move when it makes sense to do so. For example, if your MTG is now 60%, HSBC do a BOEBR+1.89%.

Yes, but the point of this is that it makes contracts meaningless. If one party of the contract has a get out clause whenever they feel like it, surely this sets a precedence that any other business can put in an exceptional circumstances clause in their contract and invoke it when things aren't going their way.

Dangerous ground if you ask me.

property.advert

So if we mismanage our contracts we can simply pay reduced interest and claim "exceptional circumstances" and all remains tickety boo ? Nonsense, though I do suppose the T&C allow a petition for it on the lender's side.

It is very bad form though and indicates that this lender was not able to manage their portfolio risk because if they were, they would not be losing money on huge numbers of these deals. Most would be securitised and repackaged. Remaining rumps would be hedged and specific reserves taken against this tranche. Not rocket science but obviously beyond this lender's capability; amateurs in a professional game.

I don't think 12 months is long enough notice. In fact, the end of the mortgage term is the correct notice period. If they want to restate terms, then they should be required to offers terms to buy out that clause. That is what you do in business, you pay to change a contract, not just take a "stuff you" attitude.

I would probably write back once, refusing their offer to change contractual terms and request they confirm they will honour the clause specifically. If they refuse, the next move would be either singularly or as a class action to approach lawyers and start racking up costs, perhaps quite serious costs.

However, each £100,000 of debt moving from 1.5% to 4.5% costs an extra £3000 per year (interest only). As the best remortgage would be in the region of 2.5%, costing you £1000 for every £100,000 of debt, this might be a starting point where you balance the cost of fighting it individually with the cost of accepting and moving.

I would certainly try to strike a personal deal first and probably only fight long term with the backing of a group of people as the lawyers required here are not your mickey mouse provincial mob but rather more heavy hitting and costly specialists.

magpiecottage

It will depend in the first instance on what the terms and conditions say.

Nationwide had a number of deals which do not allow them to change the rate but if you decide to go onto a new deal then the terms and conditions change - which is why people should be wary of accepting another fixed rate deal.

If the lender has a contractual right and you are only trying to argue that it is an unfair term in a consumer contract then you will probably have more likely to have success with FOS than a court.

However, they will then have a defence in FSA Principle 8 which requires them to balance the interests of one customer (the borrower) over another (the depositor). That pushes it into the realms of commercial decisions.

Your other argument, that you would not have chosen it if you had realised they could change the terms, would be a complaint against whoever actually sold the mortgage to you, which may not be the lender.

Thrugelmir

property.advert wrote: »

It is very bad form though and indicates that this lender was not able to manage their portfolio risk because if they were, they would not be losing money on huge numbers of these deals. Most would be securitised and repackaged. Remaining rumps would be hedged and specific reserves taken against this tranche. Not rocket science but obviously beyond this lender's capability; amateurs in a professional game.

The smaller building societies did not securitise debt as the likes of HBOS, NR and B&B did. They are reliant on retail deposits to fund mortgages.

jk38

Thank you for each and every reply to my request for help - all very much appreciated

I think I will write to them as suggested to say 'not acceptable' and if I get no joy I will look to move to another lender and/or 'pull in the belt' hard for the next few years and try to pay off what I can as early as I can (which was a plan anyway but not quite so much so soon and will mean putting life on hold with regards to holidays etc and I won't be paying as much off the loan amount due paying more interest)

I should also add that my original broker is now deceased and although his daughter has taken over his business, I've been dealing directly with the BS since he died

I just feel a bit 'cheated' by the Manchester Building Society and see it as all a bit underhand and unfair (might be legal, definately makes economic sense for them, but no way can anyone say it is fair play)

I even think notifying it's customers over Christmas when the offices were closed was no 'by chance' move

I'm in a good position with regards to LTV percentage and have an endowment (from an interest only mortgage I once had) maturing in a couple of years (which will a help partially) - I do feel sorry for anyone with the MBS who is 'in deep' and hasn't the options (albeit not ideal ones) that I have available to me

Thanks again for your help and advice

property.advert

Thrugelmir wrote: »

The smaller building societies did not securitise debt as the likes of HBOS, NR and B&B did. They are reliant on retail deposits to fund mortgages.

I have worked on structured deals with a number of small lenders. In fact, some were specifically put together to aggregate their liabilities into a larger vehicle which was then repackaged to investors.

I respect they may not be as technically expert as some others but ignorance nor incompetence is not a defence when attempting to screw over their customers.

If the OP has a legal brain or friendly lawyer to hand, he may want to see whether this is "offer and acceptance" disguised a a statement of fact by the lender. If so, the OP can simply refuse to accept the proposed offer.

Thrugelmir

property.advert wrote: »

I have worked on structured deals with a number of small lenders. In fact, some were specifically put together to aggregate their liabilities into a larger vehicle which was then repackaged to investors.

The Manchester Building Society operates wholesale funds in the range of 7% to 8.5% of assets. So not applicable in this instance.

The 2010 accounts reveal that the MBS made a return of .02% after tax. Which improved to .76% in the half year to 30th June 2011. So hardly surprising that they are raising interest rates to improve profitability and capital ratios.

katejo

jk38 wrote: »

Hi,

I've received a letter from mortgage company (Manchester Building Society) this morning telling me they are withdrawing bank base rate guarantee - can they do that ?

I currently pay 1% over the bank base rate BBR so 1.5% but as the letter states this isn't making them much money, so they are giving me notice that they are changing it to be 1% under their standard variable rate SVR in 12 months time than 0.75% under 12 months after that

Their current SVR is 5.49%

As they will be setting their own percentage of SVR this basically gives them a free hand to set SVR at what they like and thus charge what mortgage percentage they like doesn't it ?

As I signed up to a BBR plus 1% - can they just make a major change like this ?

This makes me wonder whether I will get a similar letter soon. My mortgage is currently base rate plus 0.27 and I got this deal in 2008 just about the time when the 0.50 base rate started.