MSE News: Bank of Ireland to raise mortgage SVR

suburbanwifey

I think the minute the lenders choose not to follow the BOE base rate (which has been kept at historically low to help the economy and to try to avoid another recession) that is when trouble is here. The lenders obviously do not care about those that cannot take the hikes in rate, they care not for reposessions and the consequences to the wider economy of more paying more into their mortgages and the resulting damage that will do to other businesses as less money will be spent out there in the economy (which is what the BOE didn't want) and chaos will now reign, if all lenders follow suit and this is the start of rates heading towards 15% again, the economy will totally collapse.

I am so glad I paid off my mortgage, and feel sad for all those out there in this situation.

The_J

More money spent on mortgages could mean more money for banks to loan out to business. That money isn't disappearing.

You should be glad you paid off your mortgage because it is a debt, and debt = interest and interest = you getting nothing for your money.

There is too little financial responsibility. It's not like the terms and conditions are in really small print, the FSA have dumbed it down so much than it beyond clear and there is so much information online. You cannot start complaining when things increase from the lowest ever point they had ever been.

moneymagnet_2

The_J wrote: »

There is too little financial responsibility. It's not like the terms and conditions are in really small print, the FSA have dumbed it down so much than it beyond clear and there is so much information online. .

I thought I was responsible taking advice from an IFA. I never saw this coming and I suspect that if you did a poll in the street before this - no one would have thought it possible. I bet my IFA did not even know himself that they can just make it up. If he did he should have told me!

Peelerfart

Rememebr the days when the news went something like,

"The bank of England today announced an interest rise/fall of 1%, Halifax have immediately announced they plan to follow suit but we will have to wait until the morning to find out any of the other major lenders plan to change"?

It wasn't that long ago.

moneymagnet_2

Peelerfart wrote: »

Rememebr the days when the news went something like,

"The bank of England today announced an interest rise/fall of 1%, Halifax have immediately announced they plan to follow suit but we will have to wait until the morning to find out any of the other major lenders plan to change"?

This is precisely my point - it was always linked to the interest rates and I don't think it's unreasonable that I thought that was how it was done.

Dave_Ham

Ok - so started reading this thread against my better judgement.

Firstly as a person I have sympathy for everyone affected by this very high increase in costs.

However, picking fights with each other, the banks and somehow the IFA who sold you the original mortgage is not going to help anyone.

When you took out the mortgages originally they would have been these sorts of rates, so therefore should be affordable.

On a personal level, I have been happy to take the SVR for 3.5 years now and if and when mine goes up I will look at it as 3.5 years of good times rather than getting angry about something that I cannot change.

If they put it up too much, I will personally take my business elsewere.

If I were unfortunate and my circumstances were not marketable to other banks then that would be my issue and not the banks that I currently have a mortgage with.

Now you can all either personally attack my points (or spelling) or plan the best way to manage this increase - because it is going to happen and no amount of witch hunting will change that.

My first and last post on this thread...




Dave

The_J

I can assure you he knew that the variable can be changed at any time. Do you still have your mortgage offer? If so read section 7.

An_Example_of_Section_7 wrote:

What if interest rates go up?

The monthly payments shown in this illustration could be considerably different if interest rates change.

The interest rate is fixed until XXXXXX. Your monthly payment will not change with interest rates until after this period.

After the end of the fixed rate period, then for one percentage point increase in the Standard Variable Rate, your monthly payment will increase by around XXXX.

RATES MAY INCREASE BY MUCH MORE THAN THIS, SO MAKE SURE YOU CAN AFFORD THE MONTHLY PAYMENT

What if your income goes down?

You will still have to pay your mortgage if you lose your job or illness prevents you from working. Think about whether you could do this.

MAKE SURE YOU CAN AFFORD YOUR MORTGAGE IF YOUR INCOME FALLS

The Money Advice Service information sheet “you can afford your mortgage now, but what if …?” will help you consider the risks. You can get a free copy from moneyadviceservice, or by calling 0300 500 5000.

I haven't capitalised the important points or increased the font size unnecessarily, that's generally how it appears.

Of course they can make it up, it's their variable rate! It's no unreasonable to expect them to follow the base rate but you cannot complain if they do, it's perfectly acceptable.

If you don't like it then you can move lender. A lender won't want you to move because they make money from your mortgage.

If you can't move that's not the Bank's fault.

suburbanwifey

Dave_Ham wrote: »

Ok - so started reading this thread against my better judgement.

Firstly as a person I have sympathy for everyone affected by this very high increase in costs.

However, picking fights with each other, the banks and somehow the IFA who sold you the original mortgage is not going to help anyone.

When you took out the mortgages originally they would have been these sorts of rates, so therefore should be affordable.

On a personal level, I have been happy to take the SVR for 3.5 years now and if and when mine goes up I will look at it as 3.5 years of good times rather than getting angry about something that I cannot change.

If they put it up too much, I will personally take my business elsewere.

If I were unfortunate and my circumstances were not marketable to other banks then that would be my issue and not the banks that I currently have a mortgage with.

Now you can all either personally attack my points (or spelling) or plan the best way to manage this increase - because it is going to happen and no amount of witch hunting will change that.

My first and last post on this thread...




Dave

I'm not sure why you think anyone would attack your post of criticise it, wise words. Thanks.

suburbanwifey

The_J wrote: »

More money spent on mortgages could mean more money for banks to loan out to business. That money isn't disappearing.

You should be glad you paid off your mortgage because it is a debt, and debt = interest and interest = you getting nothing for your money.

There is too little financial responsibility. It's not like the terms and conditions are in really small print, the FSA have dumbed it down so much than it beyond clear and there is so much information online. You cannot start complaining when things increase from the lowest ever point they had ever been.

Yes, I am glad that I paid my mortgage off. It saved me hundreds per month in interest (which is giving money away to banks!) and ensured I am Queen of my own Castle, you only ever truly are secure in your own home when the mortgage is gone. I am also thankful that I paid it off 2 months ago and prior to that date, interest was on the floor and had been for 3 years, saving me hundreds in interest per month. I paid it off 2 months prior to the doo doo hitting the fan by the looks of it and there is no one happier than me about it. I had my mortgage 6 1/2 years. The first 3yrs on a 2.9% fixed deal, then just as it went onto SVR the BOE slashed rates so it went to virtually no interest. For the full six years of the mortgage I paid buttons in interest. They have made no money hardly from me! The boom got me the great 3 year fixed deal originally (plus an excellent credit rating) and the recession got me 3 years of virtually no interest. I paid off my home from buying it in less than 7 years with virtually no interest. I am a recession winner. But, I have deep empathy for those that will now suffer :eek: as I think rates will now go sky high again (just a feeling I have with recent events) and I am so fortunate I know, to be out of it :T

GMS

SVR is not linked to BofE rates. It is a lender discretionary rate which they may or may not adjust in line with BofE.

When lenders 5,6 or 7 years ago had a BofE rate of around 5% they were happy to put into their terms that the SVR would not be more than 2% above BofE for example. When the fixed rates were 6% and the SVR was capped at 7% they were happy. When base rates dropped to 0.5% the banks gamble backfired as they had to drop the SVR to a rate they would never have imagined possible. As and when they were able to raise it they did.

Some lenders offered a tracker revert rate. BofE base + 1.5% for example which when BofE base was 5% should have given a revert of 6.5%. Banks happy with that.

The only rate guaranteed to track the BofE rate is a Tracker, similarly a tracker could follow Libor.

Nationwide and C&G still have a 2% above base guarantee for their SVR. Effectively a 2% above base tracker. This was never the intention of the lenders, the cap was there for their benefit if rates needed a nudge up.

Too many people have been caught out unaware of SVR not being linked to BofE. I wonder how many of these mortgages were non advised by banks? I suspect the majority of them. Thankfully non advised is on the way out. This current situation shows the need for correct advice to ensure consumers know what they are signing up for.

Mortgages are complicated and getting the right one is essential to prevent issues down the line. I would bet that before the recent rises in SVR 99% of customers wouldn't have given it a second thought or looked at it as a consideration. Recently there was a low rate lender with a SVR of 5.99% and big arrangement fees. With an SVR disproportionate to the market already would you chance it for the future?