Bank of Ireland: How to jump ship?

Thrugelmir

The_J wrote: »

Yes, I am also sick of people bashing those on a variable rate. You should not expect your SVR to increase outside of a base rate increase. Bank of Ireland shouldn't have dropped their SVR by as much (it was actually capped above base until this month, hence the earliest possible opportunity they have raised it). Smugness is not an admirable quality.

It is certainly not the current Government's fault, cutting the deficit (money we don't have) fast is very important to stop higher interest rates in the future. If you voted for Labour, especially in the later years, then really you have no-one to blame but yourself. Not saving money in the good times, encouraging a housing boom, financial mismanagement at a traitorous level (pension pot raiding and gold selling) are all their fault. Remember many of the current Labour shadow cabinet were involved in the Treasury at the time (under Gordon Brown).

I'm not saying the Tories are better, they are far too left leaning, liberal sympathisers for my liking but they are a better bet than Labour by a long shot.

Get the booklet if you can, it's not particularly useful. More important is to find out when the exit fees apply to and what they are.

edit: Rates will never be 8% again. You think any Government would survive that?

The Bank of Ireland isn't even in the UK. So BOE base and Government policy has no impact.

The BOI wants out of the UK mortgage market. Its as simple as that.

See the austerity that's been inflicted in Eire. We've had it easy.

opinions4u

The_J wrote: »

Yes, I am also sick of people bashing those on a variable rate.

The problem here isn't that people are on a variable rate. It's the expression of "outrage" and "disgrace" that a variable rate is varying.

You should not expect your SVR to increase outside of a base rate increase.

The cost of raising and maintaining the funds to support a mortgage is not linked to the base rate set by the Bank of England, the European Central Bank or anybody else. It is set by market forces, longer term LIBOR rates, swap rates and retail deposit rates. Bailed out banks such as Bank of Ireland tend to be higher risk as well. So their borrowing costs are more than, say, HSBC. This is reflected in the price offered to customers.

You cannot expect a savings market paying 3.20% for easy access money to support a long term mortgage commitment at 2.99% forever.

Bank of Ireland shouldn't have dropped their SVR by as much (it was actually capped above base until this month, hence the earliest possible opportunity they have raised it). Smugness is not an admirable quality.

The benefit of hindsight tells us it was part of an appalling business model. But their SVR borrowers have been enjoying this 2.99% rate for a good 3 years now.

Many of them expected to be paying 7.99% when they took their mortgage out. You would hope, being prudent types, they budgeted for the possibility of higher rates at 10% or 12% even. A generous twist of economic fate has left them paying under 3%.

These borrowers need to look in the mirror and consider what they have done with their reduced mortgage payments. Where has the money gone? Why are they squealing when a rate of 4.49% is a hell of a lot less than they expected to be paying.

It is certainly not the current Government's fault, cutting the deficit (money we don't have) fast is very important to stop higher interest rates in the future. If you voted for Labour, especially in the later years, then really you have no-one to blame but yourself. Not saving money in the good times, encouraging a housing boom, financial mismanagement at a traitorous level (pension pot raiding and gold selling) are all their fault. Remember many of the current Labour shadow cabinet were involved in the Treasury at the time (under Gordon Brown).

Or, translated, spending more than you earn is stupid.

I'm not saying the Tories are better, they are far too left leaning, liberal sympathisers for my liking but they are a better bet than Labour by a long shot.

Deficit reduction should be renamed. "Increasing the national debt at a slower rate" would be a better description.

Rates will never be 8% again. You think any Government would survive that?

Yes they will. And yes, the party in power can survive it. I paid 15.4% for my mortgage in 1990. The government of the day went on to win the 1992 election.

karen1234567

Have you tried RateGuard...I've just bought it and am covered.

Thrugelmir

karen1234567 wrote: »

Have you tried RateGuard...I've just bought it and am covered.

Won't cover you against announced rate changes.

The_J

opinions4u wrote: »

The cost of raising and maintaining the funds to support a mortgage is not linked to the base rate set by the Bank of England, the European Central Bank or anybody else. It is set by market forces, longer term LIBOR rates, swap rates and retail deposit rates. Bailed out banks such as Bank of Ireland tend to be higher risk as well. So their borrowing costs are more than, say, HSBC. This is reflected in the price offered to customers.

I do agree with all that you say. Regardless of this fact, you would not expect the SVR to rise out of the blue. You should plan for it of course but it's fair for the lay person to expect it to follow the base rate in a similar vein given that's what it has done for the last 10 years.

You cannot expect a savings market paying 3.20% for easy access money to support a long term mortgage commitment at 2.99% forever.

Savings rates at 3.20% :rotfl:

These borrowers need to look in the mirror and consider what they have done with their reduced mortgage payments. Where has the money gone? Why are they squealing when a rate of 4.49% is a hell of a lot less than they expected to be paying.

I agree, but there's no point in rubbing their faces in it though.

Yes they will. And yes, the party in power can survive it. I paid 15.4% for my mortgage in 1990. The government of the day went on to win the 1992 election.

What multiple of the average wage were mortgages in 1990? Under 3! What is it now? Over 5.5!

opinions4u

The_J wrote: »

I do agree with all that you say. Regardless of this fact, you would not expect the SVR to rise out of the blue. You should plan for it of course but it's fair for the lay person to expect it to follow the base rate in a similar vein given that's what it has done for the last 10 years.

While this is a significant adjustment, lenders have often fiddled with their SVRs outside of base rate changes. Typically 0.25% at a time, not 1.00% or 1.50%, but they have changed.

Savings rates at 3.20%

http://www.bmsavings.co.uk/savings/easy-access-savings/

What multiple of the average wage were mortgages in 1990? Under 3! What is it now? Over 5.5!

You're strethching the reality a little.

3.25 x income was typical for 1990. In some circumstances 3.50. Even with affordaility models today, few lenders stretch beyond four times income for standard cases. While you can get five times plus, these cases are few and far between.

DecoSparkle

1. Why should I have budgeted for 8 or 9% when I took a mortgage on a fixed 6.5% (ish) and therefore didn't expect my rate to rise? That I am now on the SVR couldn't have been foreseen, it wasn't the plan.

2. Bloody rude question but I'll answer it anyway: where has the money gone? Er, in my reduced employment circumstances. I was earning a fulltime wage when I took the mortgage out. I'm not now (and no option to increase income at present).

I'm not saying I never expected it to rise. But really, answers like "what did you expect?" and "you're stupid for not planning for this (utterly unpredictable) situation" are not very polite or human, are they?

_Andy_

DecoSparkle wrote: »

1. Why should I have budgeted for 8 or 9% when I took a mortgage on a fixed 6.5% (ish) and therefore didn't expect my rate to rise? That I am now on the SVR couldn't have been foreseen, it wasn't the plan.

Um, apart from the mortgage KFI and offer letter which clearly stated you would revert to an SVR after the fixed rate expired you mean?

kingstreet

karen1234567 wrote: »

Have you tried RateGuard...I've just bought it and am covered.

So, you've been notified of a rate increase which wasn't accompanied by an increase in BoE rate and RateGuard have told you they'll pay out?

If your rate (and the Bank of England/Libor rate) rises, we automatically pay the difference into your bank account

http://www.marketguard.com/homeowner/rate-guard/

The_J

opinions4u wrote: »

bmsavings

Come on, you need 50 grand for 3.2%!

3.25 x income was typical for 1990. In some circumstances 3.50. Even with affordaility models today, few lenders stretch beyond four times income for standard cases. While you can get five times plus, these cases are few and far between.

I was just referring to the average, a brief spike above 3 in the late 80s (was going to insert a chart but it won't let me)

Interesting viewing is look what happened when Labour came to power in 1997. This article is from the BBA so a wider spread of figures, this suggests and even higher ratio recently.

I can't post a link but look for mortgage size vs average wages on thisismoney.