Mortgage rates going up significantly (Santander)

gglaze

Hi guys,

I just got a letter from Santander a couple of days ago to let me know my rates were going up (and therefore my monthly payments).

My payments are interest only, and they are going up by almost 12% (in terms of actual payment amount - I don't mean to say my interest rate is increasing by 12%).

Santander was so "nice" to let me know that the increase would not apply to my October payment (which was already taken a couple of weeks ago!)...and therefore they would apply the excess that should have happened in October to my November payment, and so for November only, I will actually see a payment 14.4% higher than before!

The letter implies that they previously informed me that rates were being reviewed. I don't remember receiving any such notice before, but who knows, maybe I read something and threw it out.

Is anyone else seeing payment increases right now? Is this normal? I have never had a payment increase (so far rates have always gone down for me) so I really haven't paid attention to how this works. Is an increase of 12% normal?

Is it normal that they can decide to increase my rate and notify me that same month, and presume that the rate is increased even from before the day I receive the letter, and can be retroactively applied like this? I was a bit surprised, but I'm guessing the answer is, they can do whatever they want? I was thinking it was more like credit cards, where they are usually pretty good about giving you a few months advance notice at least when they are going to increase your rates, letting you know exactly when and how much, so you can really prepare yourself. And certainly not, oh we forgot to let you know before we took your payment this month, so if you don't mind we'll just take even more next month!

Is this a normal time for people in general to see their rates increased? Or is it done on an individual mortgage-by-mortgage basis? What are the criteria? Is there any way for me to anticipate when something like this might happen? I know it is somehow tied to the UK bank rates moving, but I don't really know how that works, and...when did that actually happen? Sorry if these sound like very basic questions, but I'm really clueless about all of this.

I am also wondering if other people have seen there rates moved within the same month they received the letter like this, or if this is even normal. I'm just a bit suspicious, as I also just completed my application for Santander 123 Current Account this month, and linked it to my Mortgage for DD payments - and there was some back and forth via mail and email with the bank manager, who was having to fiddle with things to get the accounts linked up properly. So I'm wondering if I somehow just shot myself in the foot and triggered this rate increase which might have otherwise gone unnoticed for a while longer? Seems like a funny coincidence, but maybe it's just that.

kingstreet

Please tell us about the actual rate increase.

What was your mortgage follow-on rate when your last product ended? Tracker? Standard variable?

Are you ex-Abbey, ex-A&L, Santander?

gglaze

Hi, this is an ex-Abbey mortgage, was on a fixed rate for the first few years, and apparently is now on Standard Variable Rate?

The new interest rate is 4.74%, and by my calculation, the rate before this increase was around 4.24%.

Thanks.

lifebeginstoday

SVR has increased with Santander has been in every paper and letters sent out, thats the downside of not having a fixed rate.

R_P_W

The big clue is that you are on the Standard VARIABLE Rate? i.e. Santander can change it when they like!

gglaze

Well yes, I am aware that variable rates change. I was just not expecting such a sudden (and apparently retroactive) change with no warning.

I was also trying to understand if this is normal - if all other mortgage customers are seeing the same increases now, and if the apparent 0.5% is the typical increase other people are seeing.

Also - do all banks usually fall in line with similar rates? Or could this be a good time to look at refinancing and finding a better deal?

kingstreet

Bank of Ireland put its SVR up from 2.99% to 4.49% over the three months ended September. Halifax has raised its SVR too, also by 0.5% IIRC.

kingstreet

gglaze wrote: »

could this be a good time to look at refinancing and finding a better deal?

I suggest you keep your mortgage rate under constant review.

latecomer

Go for a fixed rate next time.....

gglaze

Well it was a fixed rate actually, for an introductory period of 3 years I think. Then variable after that? In fact it worked out perfectly, my payment went down a lot when it switched to variable, because rates were much lower at that point I guess - and even now with the increase, it's still a good deal lower than it was when it was at fixed rate.

Are there fixed rate mortgages that stay longer than 3 years on the fixed rate? Sorry if my questions sound quite basic, I'm fairly clueless about mortgages if that's not obvious already.

kingstreet

Yes.

Ask your lender what customer retention products it has for borrowers like you and compare that with the remortgage products of other lenders.