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

alleycat`

The_J wrote: »

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!

They actually changed the wording and then sent out letters saying they could change the rates.
They then sent another letter a couple of weeks later saying to ignore their letter (after people kicked off).
It was on here somewhere.

They tried to change the meaning of something and retrospectively apply it.

It wasn't even a T's and C's small print thing.
They will all try it on if they can get away with it and this little building society will be the thin end of a very large wedge (in my opinion that is).

The_J

AMILLIONDOLLARS wrote: »

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

About as watertight as you're going to get. You shouldn't be worried regardless of what the idiots on here say.

I don't have the time nor inclination to explain the BBBR legal complexities that led to the decisions made suffice to say that they can most definitely change it whenever they want but won't. Ombudsman has ruled on it already to whoever was stupid enough to waste their time complaining.

jamesd

alleycat` wrote: »

They actually changed the wording and then sent out letters saying they could change the rates.
They then sent another letter a couple of weeks later saying to ignore their letter (after people kicked off).

Once I read that their trackers tracked their own base rate and not the Bank of England Bank Rate I decided that I'd never purchase one of their trackers because the risk of them moving the goalposts was too great. Kind of them to demonstrate the problem for me...

The_J

jamesd wrote: »

Once I read that their trackers tracked their own base rate and not the Bank of England Bank Rate I decided that I'd never purchase one of their trackers because the risk of them moving the goalposts was too great. Kind of them to demonstrate the problem for me...

:rotfl: I hope you turned down their +0.17% above Barclays base for term with no fees. That would be working terribly for you at the moment....

jamesd

If I'd been in the mortgage market at a time when rates like that were available I'd be even happier today. I'm on a hair under 3% on a fees-free deal. The interest bill is still usually less than the council tax bill so that limits how painful it can ever be. If you're on that rate, congratulations and enjoy it while it lasts!

antrobus

Pincher wrote: »

Oh well, if they can make money on 2.25%, they are not going to make me an offer I can't refuse.

It's very likely that it's all been hedged.

Pincher wrote: »

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.

They were, but not necessarily for those reasons. It's credit risk, coupled with liquidity risk, and not interest risk that was the downfall of B&B.

MiserlyMartin

datostar wrote: »

The vultures will be circling the Manchester by now. This indicates possible difficulties in balancing the books. Nationwide seems to like to snap up distressed BS's. The Co-op seems to have swallowed the Britannia satisfactorily now, but might be about to lose out on the Lloyd's branches so they might be a possibility. Santander hasn't completely digested the A&L and B&B yet but might fancy a minnow. Watch this space...

Don't be ridiculous!

Thrugelmir

The_J wrote: »

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

The 2011 annual accounts show a pre-tax profit of £590,000 on a £878 million mortgage book.

In % terms 0.067%.

Is this your idea of financial stability?

LLouiseR

A term in the Mortgage contract that allows the company to unilaterallychange the major nature of the mortgage itself is surely unfair, particularlyif this wasn't drawn to the borrowers attention at the time and it wasn'tspecified on which grounds they can change the agreement. Had they known at thetime the borrowers could have gone elsewhere. Hopefully the regulators willstart investigating.

Having said that I don’t think that such a term is unusual as my mortgageterms and conditions (with a different bank) says they can change the terms andconditions provided that it is not 'arbitrary' or for an 'improper purpose' oneof the reasons is 'any material change in conditions in or affecting the UKmarket' and another (interesting one) is 'any change in the lending practicesof banks and other financial organisations offering similar services to theagreement...'

Many of those on tracker mortgages were paying a great deal more prior tothe crash - the mortgage companies were happy when they were paying more – did theyvoluntarily cap the amount of interest by varying the terms of the agreement? Themore savvy lenders placed restrictions on how low the interest rate could dropon variable rate mortgages – why should people suffer because of the buildingsocieties lack of planning and foresight? Many people have lost their jobs andcan only just afford to keep their house and are not in the position of re-mortgaging with another lender – or cannotafford the fee’s to do so.

I’ve taken out a tracker mortgage when purchasing my first house last year -the interest rate is 2.6%, I know at some point it will increase, the bank hassince increased its rate for new mortgages on the same deal - but its stillunder 3.0%. Its up to me to plan for the eventual increase, just as its up tothe bank to plan for the rate to stay low.