65% increase in rate

Smick100

I work for a bank which also offers mortgages.

As part of my benefits I get a staff rate mortgage which is 0.7% less than the standard variable rate, which is currently 2.99%.

The bank intends to increase its SVR by 50% in the next six months, from 2.99% to 4.49%

This means my rate will be going from 2.29% to 3.79%, an increase of 65%.

While I understand a standard variable rate is variable, is there anything in place to prevent a lender increasing rates by 65%.

I believe the first increase will be 1% in June and then a further 0.5% in September. Does spreading out the increases make it legal?

Even for non-staff, an increase of 50% is fairly harsh.

_Andy_

No, an SVR can be whatever they wish.

_Andy_

And they don't have to spread out the increases to 'make it legal'

Dave_Ham

I cannot believe the bank you work for has not issued some form of communication to cover this.

Typically with bad news and I bet Halifax did it, they would give you some reasons to give to customers who happened to moan at you.

So subject to assuming you are customer facing and this afternoon a client comes in and moans about the proposed SVR increase, how do you deal with that when you do not know the answer yourself..

Interesting.... and I think it is a shame but totally legal

Smick100

I'm not customer facing. The only thing my job has in common with the people selling the mortgages or pricing them is that our pay comes from the same place.

They have produced a list of SVRs showing the old and new rates. The old puts us ahead of all the major lenders, the new puts us in the middle. That appears to be the justification.

On the communication we received, it was stated that customers were able to change to other mortgage products issued by us if they are better for the customer and they have appointed an independent financial adviser to do an audit for customers for free to see if they would be better switching elsewhere. For staff they have also provided a list of money counselling services and details of senior account advisers who staff members can discuss their account with in a confidential manner, although I would have thought that junior advisers should be confidential as well. Rates of pay in this bank have been frozen since 2008 and there have been no bonuses, entertainment etc.

But for me the net result is the same. 65% increase in year 1 of a mortgage.

saverbuyer

Is it worth you while to be on the staff rate after paying tax on the benefit element?

opinions4u

They can vary the rates on their variable rate mortgages.

You're linked to that variable rate, so start budgeting now.

Do you have equity in the property? Could you benefit from remortgaging?

The good news is that this will significantly reduce your benefit in kind tax. I assume you've advised HMRC about your beneficial mortgage.

Smick100

:rotfl:

opinions4u wrote: »

They can vary the rates on their variable rate mortgages.

You're linked to that variable rate, so start budgeting now.

Do you have equity in the property? Could you benefit from remortgaging?

The good news is that this will significantly reduce your benefit in kind tax. I assume you've advised HMRC about your beneficial mortgage.

Yeah, the bank made the declaration to HMRC and I got a letter reducing my tax free allowance.

We only took out the mortgage in August of last year so have no equity.

The revised figure will be within our means, although I don't yet know what it will be, but nobody likes to pay an additional £200 per month with nothing to show for the extra outgoings.

kingstreet

No surprise, this is good old Bank of Ireland.

1% increase from June 2012, followed by a further 0.5% from September 2012.

No cashback offer, this time.

minibbb

kingstreet wrote: »

No surprise, this is good old Bank of Ireland.

1% increase from June 2012, followed by a further 0.5% from September 2012.

No cashback offer, this time.

I just got this letter through this morning from the BOI and its outrageous! Never liked them mind you as the service I have experienced in the five years i've been with them has been appalling.

Have already called my mortgage adviser to see if I can go elsewhere.

GMS

minibbb wrote: »

I just got this letter through this morning from the BOI and its outrageous! Never liked them mind you as the service I have experienced in the five years i've been with them has been appalling.

Have already called my mortgage adviser to see if I can go elsewhere.

That's the way forward, vote with your feet. Essentially this is what they want as they want their mortgage book as low as possible.

It's not outrageous. They set the SVR and have chosen to increase it. They aren't the first and I doubt they will be the last