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Lenders raising SVR & Tracker Rates.. Could be Unfair/Illegal...
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HAMISH_MCTAVISH
Posts: 28,592 Forumite


Excellent article in today's Telegraph about mortgage lenders moving the goalposts and changing tracker or SVR rates despite the base rate not changing:
http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/9216995/Mortgage-lenders-move-the-goal-posts.html
However, if they want to change their previous tracker or SVR rate commitment, their right to do so must be clearly laid out on the Key Facts Illustration document, (it can't just be buried in the small print).
If it is not then chances are it is illegal for them to do so.
So in a nutshell, if the bank wants to invoke a clause to change the terms, it must be included in the Key Facts Illustration and not buried in the small print.
Any such changes must also be proportionate.
It does seem likely that more Banks/BS will try to unfairly change the terms on these deals....
As the article puts it:
So it's important that borrowers understand their rights, and challenge any attempt by lenders to impose unfair changes to mortgage agreements.
IN the first instance they should complain in writing to the mortgage lender, and if a satisfactory response is not received within 8 weeks, they should complain to the Financial Services Ombudsman.
http://www.financial-ombudsman.org.uk
Complain by Phone: on 0800 023 4567 or 0300 123 9 123 (8am to 6pm, Monday to Friday) – and we’ll help you with the complaint form over the phone
Complain by Post: enter your details here and they'll send out a compliant form http://forms.financial-ombudsman.org.uk/
http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/9216995/Mortgage-lenders-move-the-goal-posts.html
However, if they want to change their previous tracker or SVR rate commitment, their right to do so must be clearly laid out on the Key Facts Illustration document, (it can't just be buried in the small print).
If it is not then chances are it is illegal for them to do so.
Mr Boulger said customers should check their mortgage offer documents very carefully, especially if they were advised about changes to their SVR or tracker.
He said that if your mortgage company wanted to invoke a clause in your contract it should be in the "key facts illustration" (KFI), not in the general small print of the mortgage contract.
If it is not in the KFI, Mr Boulger said, there is precedent that the change will not be allowed.
Mr Boulger said anyone who felt this was not the case with any changes to their mortgage rate could take it up with the Financial Ombudsman Service (FOS) if they were not happy with the response from their lender.
So in a nutshell, if the bank wants to invoke a clause to change the terms, it must be included in the Key Facts Illustration and not buried in the small print.
Any such changes must also be proportionate.
He added that even SVR changes where there were no guarantees to the customer that any rises would be pegged to Bank Rate still had to be proportionate.
He cited a recent case from the Cheshire Mortgage Corporation (CMC), where the FSA found that a contract term was unfair and asked the lender to change it.
The term had allowed CMC to change the interest rate at any time for any reason. "We thought the term was too wide and was unfair because the firm's power was unrestricted," the FSA said.
It does seem likely that more Banks/BS will try to unfairly change the terms on these deals....
As the article puts it:
Most lenders had assumed that mortgage rates would be higher by now, but the crisis in the eurozone meant that the current low-rate environment would drag on for many years
"Lenders are going to do everything they can to push up rates," he said. "They never cease to surprise in the ways they find to treat customers unfairly."
So it's important that borrowers understand their rights, and challenge any attempt by lenders to impose unfair changes to mortgage agreements.
IN the first instance they should complain in writing to the mortgage lender, and if a satisfactory response is not received within 8 weeks, they should complain to the Financial Services Ombudsman.
http://www.financial-ombudsman.org.uk
Complain by Phone: on 0800 023 4567 or 0300 123 9 123 (8am to 6pm, Monday to Friday) – and we’ll help you with the complaint form over the phone
Complain by Post: enter your details here and they'll send out a compliant form http://forms.financial-ombudsman.org.uk/
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
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Comments
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Some lenders quite clearly cannot change the terms, for example the pre 2009/2010 mortgages from Lloyds, C&G and Nationwide with the lifetime BOEBR + 2% caps on SVR.
But it's also important such borrowers realise what a good deal they'll be losing if they switch to any other product from the same lender, like a new short term fix.Nationwide had exactly the same problem as Lloyds TSB in having a contractual commitment in their mortgage offers that its SVR would not exceed 2% above Bank Rate.
There was no way out of this commitment and so the only solution for it was to introduce a new SVR for new mortgages.
Existing borrowers will not be affected unless they switch to new deal by doing a product transfer. Lloyds TSB, C&G and Nationwide borrowers who wish to remain on a variable rate, which for the time being seems sensible for most people, would be mad to opt out of a lifetime tracker capped at 2% above Bank Rate with no early repayment changes.
However, if they want to consider switching to a fixed rate they will need to take into account that they are permanently giving up this very good long term capped tracker rate.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
It would be interesting to hear from anyone with a mortgage from one of the banks/BS who have recently announced rate hikes as to what their mortgage key facts document contained.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Hi I recently reviewed my Halifax KFI offer from October 2008. It only refers to BoE rate rises as an example when rates would rise. Even if only be legitimate expectation you would only expect them to alter rates if the BoE rate changed. I have put a complaint in to the ombudsman - lets wait and see......HAMISH_MCTAVISH wrote: »It would be interesting to hear from anyone with a mortgage from one of the banks/BS who have recently announced rate hikes as to what their mortgage key facts document contained.0
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Im with Barclays/Woolwich. It was only after taking my tracker mortgage that I started to realise it tracked the BBBR and not BoE.
Historically BBBR and BoE rate have been the same but its an easy out for Barclays just to hike up their base rate at any time they like.0 -
Morgage_Confused wrote: »Im with Barclays/Woolwich. It was only after taking my tracker mortgage that I started to realise it tracked the BBBR and not BoE.
Historically BBBR and BoE rate have been the same but its an easy out for Barclays just to hike up their base rate at any time they like.
They wouldn't dare............would they ?0
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