MSE News: Building society breaks tracker mortgage deal to quadruple rates

Former_MSE_Helen

This is the discussion thread for the following MSE News Story:

"A group of Manchester Building Society mortgage holders face an unprecedented rise in home loan costs of £1,000s"

Read the full story:
Building society breaks tracker mortgage deal to quadruple rates

jamesd

No doubt that we have been in exceptional circumstances which for lenders using money market financing has meant that they are borrowing money at a higher cost than the lowest margin old trackers, perhaps lending at 0.99% while having to borrow themselves at over 2%.

If the choice is bankruptcy for the lender or using an exceptional circumstances clause this seems reasonable enough.

If the choice is a commercial risk that didn't work out for the lender and did for the borrower that's a very different matter - lenders are professional players in the lending and borrowing markets and should be aware that their funding costs could exceed lending rates sometimes.

The demand for repayments could easily be impossible to meet. A 54 year old with a £250,000 mortgage to be repaid by a pension commencement lump sum in a year would find a demand for £250,000 to be paid over a year and still be barred from taking the pension money before age 55. Pretty obvious that such conduct would be grossly unreasonable but it'd also be unreasonable for others with effective repayment vehicles in place and well funded. Even for those who become 55 and could get at the money, losing years of investment growth at rates higher than the mortgage interest rate would be unreasonable.

wymondham

If the BofE keep rates low for so long it's only natural they wanted to make money and put their own rates up.... i suspect others may follow....?

michaels

I don't suppose anyone has time to look at other lenders tracker small print to see whether they have such dodgy clauses both on reneging on tracker promises and converting IO to repayment?

I have an FD tracker at +1.99%, do you think if in the future typical tracker margins were +1% they would unilaterally let me declare that due to market conditions I had decided to alter the agreement in my favour? Didn't think so.

brit1234

We all know the cost of borrowing for the banks is going up and they need to charge higher rates to attract the savers. The BOE base rate is now a joke and is almost meaningless. Expect more mortgage rate increases all over the place especially with the troubles in Europe.

The_J

Nah, I don't see changes from the bigger banks. This has apparently affected 10 people, one of them must be in the MSE office for this to make the news.

sprouty76

I'm a saver with the Manchester - I currently have an ISA with them (I don't have a mortgage with them or anybody else).

I've just sent them the following:

Hi, I'm a saver with you (I have an ISA). I don't have a mortgage with you, but I am so absolutely disgusted with what you've done with the tracker mortgages that I'll be transfering my funds out as soon as I can get an ISA opened elsewhere.

Especially nauseating is your claim that you need to look after savings customers, when you've just reduced my interest rate.

Yours,

<my full name>

kingstreet

The_J wrote: »

Nah, I don't see changes from the bigger banks. This has apparently affected 10 people, one of them must be in the MSE office for this to make the news.

I read it as 10 IO borrowers being switched to C&I.

michaels

Good post.

I must admit I would never deal with them after this whatever was offered as how could you be sure there wasn't something sneaky hidden in the small print?

sprouty76 wrote: »

I'm a saver with the Manchester - I currently have an ISA with them (I don't have a mortgage with them or anybody else).

I've just sent them the following:

N1AK

Lesson learned here: Companies that offer 'tracker' mortgages should not be able to advertise it as a tracker mortgage if it can be changed without the customers permission.

Effectively Manchester BS offered a 5 year tracker that they might allow to continue to be a tracker if they want to. To me the question is: Would it be ok if they had stuck something in the small print saying that it would become a SVR based mortgage in 5 years? If not, then is saying they might do it really any better.

Between this, inflation linked mobile bill changes and other examples I think it's pretty clear that companies are getting far more benefit out of long and complex T&Cs than consumers are and consumer groups and the government need to start acting.

sprouty76

michaels wrote: »

Good post.

I must admit I would never deal with them after this whatever was offered as how could you be sure there wasn't something sneaky hidden in the small print?

Just for the avoidance of doubt, I was already looking to move once they dropped the rate - but I am genuinely appauled at what they've done here (despite it not directly affecting me) and thought I would take the opportunity to make the point a little more, shall we say, forcefully.