MSE News: Bank of Ireland to raise mortgage SVR

DecoSparkle

kazoouk wrote: »

Got the letter this morning.. This has been what I have been dreading for a long time.. For all those smart !!!!!! who seem to think we can just change to a fixed.. No dice.. We have less than 10% equity thanks to the housing dip .. We are stuck.. 1.5% in less than a year is criminal.. We are going to be down £200 a month. I feel absolutely trapped as I know this is only going to get worse when the boe rate goes up which is inevitable

Exactly the same as us. We were only on the SVR as our fixed rate ended and we couldn't get another one due to not having enough ltv after the price dip (we had to buy when we did, and it was at the peak of the market). We expected the rate to vary, but we expected that variation to be because of the base rate going back up and as such be more gradual, like 0.25% or 0.5%, not 1.5%. We will have to find another £100-odd a month.

BoE have tried to get rid of us a couple of times but we have no option but to stay - "mortgage prisoners".

Also when I asked BoE for the exact amended repayments, they refused to give them to me and said I would be notified ten days before the rate took effect. Not a great way to treat people who've just been told they're putting the rate up for no reason (they say it's because financing mortgages has got more expensive, but I thought they'd stopped new lending, so presumably they don't actually have to fund them any more?!)

FWIW, my IFA thinks it's appalling and an awful way to go about things, and that the rate increase is excessive compared to what others have done.

When base rate increases you can bet there'll be another SVR rise, too. I wish we could move, but we can't, and we didn't choose to be on the SVR.

suburbanwifey

I know the mortgage advisers on here all say that being on SVR, you should expect rate rises and I agree. Speaking as a home-owner who paid off her mortgage a few weeks ago now, and none of this affects me directly, I am sad for all those out there that this is happening to. I personally always thought (wrongly maybe?) that the SVR of a lender should ONLY RISE when the BOE raises interest rates. The BOE has kept rates historically low to supposedly help all out there with big mortgages, so warding off reposessions as much as possible. Yet, mortgage companies are now starting to raise rates when the BOE rate hasn't moved? Don't understand why they should be able to do this (though understand what the mortgage advisers on here have said about it, so I do understand) I just don't think its fair or just or moral in the current climate with so many having borrowed so much, everything at sky high prices and petrol bordering on unaffordable. What are they trying to do? cripple everybody???

kazoouk

I absolutely agree that I was expecting rate rises, we are trapped and I have been living in fear of it, but was kinda expecting it to go up with the base rate, I'm really shocked at this.. I will be going on maternity leave exactly when the rate goes up to the 1.5% rise .. We are going to really struggle, not sure how long I'll be able to have off.. :-(

suburbanwifey

So why are they raising rates when the BOE is keeping the rate at the bottom for at least another year? The BOE are doing this to help the economy, so why are the mortgage companies going to destroy that by raising SVR rates and taking money off people when they don't have it, thus causing thousands of repossessions in the future? Sorry for you Kazoouk, I'm shocked by recent events too.

poppy10_2

suburbanwifey wrote: »

I personally always thought (wrongly maybe?) that the SVR of a lender should ONLY RISE when the BOE raises interest rates.

As has been said above, the SVR rises when it costs the bank more to raise funds. Even though the BoE has not raised rates, the rate at which banks lend each other money has risen significantly.

Thrugelmir

poppy10 wrote: »

The banks can't subsidise their mortgage customers, if LIBOR is going up and it is costing them more to obtain funds, then they will inevitably pass the cost on to the customers.

Whilst mortgage interest rates may be determined by LIBOR. Banks do not fund their mortgage books with inter bank lending.

In fact its the lack of inter bank lending that's causing the liquidity crisis in Europe. Hence why the ECB has been active in recent months.

char_student

Oh know! We have just taken out a mortgage (well almost, complete next week) with Post Office. 3 years fixed - LUCKILY!!!

ILW

Does nobody know the difference between an SVR and a tracker?

amjustagirl

kazoouk wrote: »

I absolutely agree that I was expecting rate rises, we are trapped and I have been living in fear of it, but was kinda expecting it to go up with the base rate, I'm really shocked at this.. I will be going on maternity leave exactly when the rate goes up to the 1.5% rise .. We are going to really struggle, not sure how long I'll be able to have off.. :-(

Am in the same boat due to go on maternity leave and could really do without a £200 a mth increase in our mortgage. Didnt even know that the banks could do this?! when the bank of england hav'nt increased their rate. Rob dogs, it really is getting silly now..where/when will this end? Basically they have us over a barrel!! Can see alot of repo's on the horizon Am fuming at the minute :mad:

Consumerist

suburbanwifey wrote: »

So why are they raising rates when the BOE is keeping the rate at the bottom for at least another year? The BOE are doing this to help the economy, so why are the mortgage companies going to destroy that by raising SVR rates and taking money off people when they don't have it, thus causing thousands of repossessions in the future? Sorry for you Kazoouk, I'm shocked by recent events too.

My understanding is that the BoE bank rate is the rate at which a copper-bottomed, gold-plated bank can borrow from the BoE as a lender of last resort. In practice, banks have to pay somewhat more than the bank rate to borrow from the BoE. So banks lend to each other to cover such things as balancing the books overnight and the average rate at which they do that is reflected in the LIBOR rate. Note that the LIBOR rate is a measure of lending rates but BoE base rate is a set rate.

The problem is that banks don't trust each other any more so the rates at which they lend to each other have risen and banks have to find more of their funding from savers who want a reasonable rate of return. Government has also increased the fraction of deposits which banks must hold in reserve so reducing the amounts they can lend and further pushing up lending rates.

So it must be those greedy savers who are to blame. :rotfl: