MSE News: Mortgage prisoners need help to escape costly loans, watchdog told

chewback

AJ2007, you miss the point. Anyone who is counted as a so called mortgage prisoner is now fair game for the banks to increase their SVR as high as they like because they know you cannot go anywhere else. What the FSA are saying is that there should be some checks and balances as to how much these are increased.
"Give a man a gun and he can rob a bank, give a man a bank and he can rob the world"

The_J

All I'll say to that is that this is just the beginning. SVRs will return to high 7%, people need to start preparing for that.

Thrugelmir

chewback wrote: »

What the FSA are saying is that there should be some checks and balances as to how much these are increased.

You've missed something too. Not the FSA in the article but the Financial Services Consumer Panel. So entirely different.

The FSA will allow lenders to charge whatever is necessary to stay in business. So SVR's will continue to increase. As the cost of funding is rising on the markets, and savvy savers lock into high rate fixed term accounts offering 4% plus rates.

Credit-Crunched

chewback wrote: »

AJ2007, you miss the point. Anyone who is counted as a so called mortgage prisoner is now fair game for the banks to increase their SVR as high as they like because they know you cannot go anywhere else. What the FSA are saying is that there should be some checks and balances as to how much these are increased.
"Give a man a gun and he can rob a bank, give a man a bank and he can rob the world"

If this is the case why did people not fix their mortgages for longer?

They are on a STANDARD VARIABLE, which means that the rate can vary, there are no set parameters. When taking my mortgage I used the BBC mortgage calculator and on it it showed 'careful on 8% your repayments would be £x' I ensured that I could repay the mortgage at this percentage which was nearly double the standard variable.

People need to take responsibility for their actions, assume the worst and prepare for it.

shortchanged_2

Credit-Crunched wrote: »

People need to take responsibility for their actions, assume the worst and prepare for it.

Unfortunately this is where it all went horribly wrong.

Tried_to_be_prudent

I am mortgage prisoner with SVR of 5.79%, with LTV that was 70%. Property prices have dropped, so I can't sell or remortgage, nor even get the £10,000 lump sum back that I have overpaid, not to mention the £30,000 deposit I put down. Wished I could get even 2% on that lost money and........... What happened to the 2-2.5% margin above Bank Base rate for borrowing?

The_J

Tried_to_be_prudent wrote: »

I am mortgage prisoner with SVR of 5.79%, with LTV that was 70%. Property prices have dropped, so I can't sell or remortgage, nor even get the £10,000 lump sum back that I have overpaid, not to mention the £30,000 deposit I put down. Wished I could get even 2% on that lost money and........... What happened to the 2-2.5% margin above Bank Base rate for borrowing?

So you had a mortgage of 70k on a property of 100k. I presume you have had this for 5 years on a repayment basis so that should be down to about 57k with a 10k overpayment. So you are saying your property is worth less than 70k? That's a savage drop.

However the interest you are paying each month is £275, how much would renting cost? I take it more than that so if you are planning to live there as a home for a while there is no major problem.

Borrowing costs are not relevant to the Bank of England base rate either. If anything, the base rate is exaggerated and too low, should be higher.

Consumerist

Hi Tried to be prudent and welcome to the forum.

I was about to post something similar to The J's post but be pipped me to the post (no pun intended).

Another point I would make is that your deposit and overpayment are effectively earning you 5.79% since without them your interest charges would have been around 40% higher than you currently pay.

Thrugelmir

Tried_to_be_prudent wrote: »

What happened to the 2-2.5% margin above Bank Base rate for borrowing?

At that level savers would be paying banks to take their deposits.

As savings rates would need to be 1% - 2% below base.

The difference being the margin to cover overheads, regulatory FSA fees, corporation tax and finally leave a profit.

The link is broken until such time as the BOE controls interest rates again. At the current time the market does. The market by the way is the likes of you and I. Not some third party. As its our savings which is being lent to fund mortgages.

Consumerist

Credit-Crunched wrote: »

If you refer to an KFI document they clearly state the impact of a price rise in the BOE base rate,

But recent interest rate rises have not been linked to a change in BoE Bank Rate (which has been steady for the last three years).

it is the responsibility of the mortgagee to look at this information.

You appear to be saying that IFAs and mortgage advisers are just not worth wasting your time with. An interesting point of view.