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

Thrugelmir

katejo wrote: »

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.

Base rate hit .5% in March 2009.

Was only supposed to be an emergency measure. Now nearly 3 years later the true extent of the global financial crisis is only just hitting home. As the whole bubble deflates.

katejo

Thrugelmir wrote: »

Base rate hit .5% in March 2009.

Was only supposed to be an emergency measure. Now nearly 3 years later the true extent of the global financial crisis is only just hitting home. As the whole bubble deflates.

Yesterday eve I looked at the website of my mortgage lender to see if they were still advertising base rate tracker mortgages. They are and still have several on offer around base rate +2-3%

I certainly wasn't expecting the 0.5% to continue anywhere near as long as it has done.

SouthCoast

Thrugelmir wrote: »

From my experience people rarely read contracts or seek professional advice before signing them.

Has the OP actually read their mortgage contract to ensure that a "Force Majeure" clause is not included?

jk38

At the risk of repeating myself - Yes I read the contract and mortgage offer details

The only applicable clause states -

"Under the mortgage the Society has the right to vary the rate of interest. The revised rate must not be above the rate chargeable at the date of the notice on new mortgaes which the Society considers to be of the same type"

I read that to mean that they can't change the rate of an exisitng mortgage above that of the rate of a same type product they are offering at the date of the notice of the rate change

So looks like that can up the rate to what they like as long as it's not more than the rate (on the day of notice) for their new like for like products

Trouble is, on the day of notice their mortgage rate product page is "currently being updated" and so isn't available and their offices are closed - so not too easy to compare new products with proposed hikes imposed on exisitine ones.

Their recent notice letter states "The linkage to BBR was guaranteed to apply for a minimum of 5 years from when the mortgage product was taken out"

I can't find this clause in the mortgage contract anywhere

Considering that I signed up for BBR plus 1% (1.5%) and this will change to link to their own SVR ....I feel a bit cheated...... has anyone else had similar happen ?

Any constructive helpful feedback or comments, are, as always, very welcome

katejo

shortchanged wrote: »

But the problem is Thrugelmir with these exceptional circumstances clauses is that the banks/building socities hold all the aces.

However thoroughly a potential mortgagee might have read the contract pre 2009, he/she could never have predicted the current situation re. interest rates.

katejo

jk38 wrote: »

At the risk of repeating myself - Yes I read the contract and mortgage offer details

The only applicable clause states -

"Under the mortgage the Society has the right to vary the rate of interest. The revised rate must not be above the rate chargeable at the date of the notice on new mortgaes which the Society considers to be of the same type"

I read that to mean that they can't change the rate of an exisitng mortgage above that of the rate of a same type product they are offering at the date of the notice of the rate change

So looks like that can up the rate to what they like as long as it's not more than the rate (on the day of notice) for their new like for like products

Trouble is, on the day of notice their mortgage rate product page is "currently being updated" and so isn't available and their offices are closed - so not too easy to compare new products with proposed hikes imposed on exisitine ones.

Their recent notice letter states "The linkage to BBR was guaranteed to apply for a minimum of 5 years from when the mortgage product was taken out"

I can't find this clause in the mortgage contract anywhere

Considering that I signed up for BBR plus 1% (1.5%) and this will change to link to their own SVR ....I feel a bit cheated...... has anyone else had similar happen ?

Any constructive or helpful feedback and comments are as always very welcome

When you first took out your tracker mortgage, was it for a specified time period eg. 2 or 3 years or perhaps 5 as you have referred to their 5 year statement above?

Mine is a lifetime tracker. No idea if that will make any difference.

Thrugelmir

katejo wrote: »

However thoroughly a potential mortgagee might have read the contract pre 2009, he/she could never have predicted the current situation re. interest rates.

Neither would the lender.

Building Societies like banks are very heavily regulated. So the Board of Directors are duty bound to take the required action if they foresee problems arising.

jk38

it was a lifetime tracker......or so I thought

in their eyes it's still a tracker - just won't be tracking BBR but a 'made up' SVR

katejo

jk38 wrote: »

it was a lifetime tracker......or so I thought

in their eyes it's still a tracker - just won't be tracking BBR but a 'made up' SVR

If this approach spreads to the big lenders, a tracker mortgage will lose its attractions.

shortchanged_2

katejo wrote: »

If this approach spreads to the big lenders, a tracker mortgage will lose its attractions.

Well I suppose that's why we'll never see tracker rates being offered any less than 1.99% above BoE rate (and that's for very good LTV's) again.

I wonder how much of the mortgage population is actually on a very low rate BoE tracker. It would certainly be interesting to find out what percentage of the mortgage market are on trackers of say 1.5% above BoE and lower.

Because I can't see many of these people wanting to give up these rates in a hurry and the longer these very low interest rates go on I wonder if we'll see more and more of what the likes of the Skipton and Manchester Building Socities have done.