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

The_J

Tell me, how will Nationwide raise rates (I presume you mean the BMR)? Show me where, in the T&Cs, it gives them the ability to do this?

Nothing like a news thread to bring out the dribbling alarmist nutjobs.

Pincher

poppy10 wrote: »

Pretty much. Mortgage Express was part of Bradford and Bingley which was nationalized in 2008 and is now government owned. They are under no pressure to increase rates and do not need to raise wholesale funding from the markets as they are no longer lending to new customers.
They are just winding down their existing loan book.

I am aware of the nationalised nature of Mortgage Express.

Being nationalised does not preclude the "urge" to reduce ongoing losses, and recovering the principal. If the government changes the interest rate, whom can I sue?

I was hoping for one of those offers where they give you a discount on the principal if you redeem the mortgage, which was offerd by quite a few lenders a few years ago. On an Interest Only, they won't get their principal back except after another 16 years. If it goes like Japan, I have another 10 years of ultra-low BOE rate to ride on, so I can wait. If the "government" has a proper accountant, a 30% discount on the principal is not a bad deal.

Alternatively, they can give me CGT Allowances, which will come in handy in the future. Just something I dreamt up.

Capital Gains Tax Allowance Certificates
==========================

Currently, it's hard to save up CGT allowances as a private tax payer, other than carrying forward capital losses, which is not very flexible. If George Osborne were to issue CGT Allowance certificates, redeemabe anytime you want, and TRADABLE, the certificates would be worth money, to people who have too much capital gains in a particular year.

Grannies, and most people who don't trade in stocks and shares currently have around £9,000 of CGT allowance they don't use. If they are issued CGT certificates, they can sell them, for say £80 per £1,000 CGT. The buyer would have paid £180 per £1,000 of gain, but now pays nothing, by buying the certiifcate for £80. So the buyer is paying 8% on the gain, instead of 18%.

George Osborne can then horse trade with these certifcates, such as offering me these CGT allowance certificates for redeeming my Interest Only mortgage, without seeming to give me a discount.

A Buy-To-Let borrower would not want to sell to redeem an Interest Only deal, because they incur hefty capital gains. If there is no capital gains to pay, it's similar to giving them a discount on the mortgage principal.

antrobus

Pincher wrote: »

....It's bizarre, other people's deals seem to be falling apart left right and centre, but Mortgage Express just keeps going.

Correct me if I'm wrong, but isn't Mortgage Express the Bradford and Bingley (as was). Which means it's now part of UKFI?

Pincher wrote: »

.
Maybe there is just a computer running, with nobody in charge.

You might very well think that; I couldn't possibly comment.

antrobus

Pincher wrote: »

I am aware of the nationalised nature of Mortgage Express.

Being nationalised does not preclude the "urge" to reduce ongoing losses, and recovering the principal.
...

What ongoing losses? The old B&B book was profitable the last time UKFI published its numbers.

Pincher wrote: »

If the government changes the interest rate, whom can I sue?

Probably nobody. The government makes the law after all.

The_J

None of the nationalised banks/building societies have any major problems with their loan books. They just didn't have the capital reserve when the poo hit the fan.

I think I read on here that Nationwide having more capital reserves was somehow going to mean they need to raise rates. It's preposterous!

The banks are increasing rates using the small print for any number of reasons but mainly it's because:

a) They can
b) They want to make money (mortgage rates are higher this year than last so if you raise the SVR the revenue gained isn't likely to be lost as fewer people will jump ship)
c) They want to capitalise their loan book (e.g Bank of Ireland)

These banks are a BUSINESS. They make money for their shareholders. Do not confuse the emotive issue of paying for a house with the clinical facts.

alleycat`

They will all try it on.

Barclays have changed the wording on "Barclays Base Rate" such that it now reads as....

"Barclays Bank Base Rate typically follows the Bank of England Bank Rate but it is not guaranteed to do so."

compared to 2008

"Barclays Bank Base Rate
Barclays Bank Base Rate follows the Bank of England Base Rate, which can go up or down and is announced by the Bank of England's Monetary Policy Committee every month."

I was fortunate i had a copy of this exact wording when they tried to pull this little stunt on existing tracker customers.

The_J

What stunt? They haven't tried to deviate from that as yet. The change in the wording brings the small print forward due to claims that it was misleading so if they want to increase that, regardless of when you took it out, they can.

Given the likely outrage, the relative stability of their capital reserves and limited exposure to negative UK markets I can't think of any commercial reason why they would. But hey, good on you, leading the imaginary fight against the bankers!

Pincher

antrobus wrote: »

What ongoing losses? The old B&B book was profitable the last time UKFI published its numbers.

Oh well, if they can make money on 2.25%, they are not going to make me an offer I can't refuse. They must have been losing money during the credit crunch, when wholesale funding was more expensive. I suppose if they didn't have government backing then, they may very well have offered a discount redemption deal.

If Manchester BS couldn't make the changes stick,
discounted redemption deal is probably next.
Or we will soon have a reluctant bride for the polygamous Nationwide.

The_J

Manchester are in pretty reasonable financial position. This has absolutely nothing to do with financial stability.

AMILLIONDOLLARS

The_J wrote: »

Tell me, how will Nationwide raise rates (I presume you mean the BMR)? Show me where, in the T&Cs, it gives them the ability to do this?

Nothing like a news thread to bring out the dribbling alarmist nutjobs.

I'm on Natiomwide's BMR and in the small print, it says for the life of the loan, pretty water tight, but you never know:(

AMD