"Thousands" with BOE trackers face mortgage interest rate rise

chucknorris

james_toney wrote: »

so looks like only BOI can do this, then, great more BTL for me then,

My wife also said that she read a few mainstream lenders had stated that they would not be following suit in London's Metro newspaper yesterday, but I didn't read that article myself.

Graham_Devon

The stories are making the papers now.

It's becoming clearer that the people this hits the most are on IO deals (calculations have been made based on the cost increases people are seeing).

The mortgages effected will only be mortgages taken out pre 2004. Therefore, these are 9 year old IO mortgages.

All this may give a clue as to why there appears to be issues even listening to advice to re-mortgage.

Ray Boulger has got involved now, and hasn't given advice as such, but has detailed how to make a complaint such that they can't charge you any interest for the next 12 months (while the complaint is lodged). Dunno how this helps BOI's predicaments of raising capital and dunno how it helps the mortgage holder as after 12 months, I'm assuming all interest will be due? Seems he can't say it's wrong, can just suggest how to extend (and pretend?) for a bit.

No one in the mortgage industry has so far said it's wrong or illegal. Only to make complaints to stall the process as much as possible.

Personally, I find this advice morrally wrong, as we have to remember, at the other end of all this are innocent tenants, anything which simply extends porocesses will hit the tenants harder later.

Thrugelmir

chucknorris wrote: »

Others following might not be a foregone conclusion.

HSBC are not in the same financial position.

BOI is effectively a closed mortgage book that's being run down. So no new business to offset.

Graham_Devon

Several BTL mortgage owners had offers of thousands of pounds (one £8,500 cash to re-mortgage elsewhere and another £13.850 to re-mortgage elsewhere) in July 2012.

Part of the reason cited was because they needed to increase their capital reserves. Presumably paying 8k to reign 200k (for example) back to add to reserves was something BOI felt worth doing.

Of course, the landlords refused and now find themselves hit with this. To be fair, one of the property118 forum does state this is fair play, he should have jumped when warned and with the lure of cash, but he clung on to the rate thinking he's make more money.

Edit: What's scary again is there appears to be quite a few on there who will also be crippled by this and reposessed (these are all BTLs). I just don't know how. They bought pre 2004?

Thrugelmir

Graham_Devon wrote: »

Edit: What's scary again is there appears to be quite a few on there who will also be crippled by this and reposessed (these are all BTLs). I just don't know how. They bought pre 2004?

Probably because they have no idea what they are doing.

Anything they've earnt they've spent.

Rather than reinvesting and reducing the debt burden.

Graham_Devon

Thrugelmir wrote: »

Probably because they have no idea what they are doing.

Anything they've earnt they've spent.

Rather than reinvesting and reducing the debt burden.

Well the only thing I can think of is re-investing and getting more loans? Certainly the ones who have said this will cripple them all have multipe loans, whether that be on the thread in the mortgages section on here, on property118 or in the telegraph comments.

Another comment stated they had an offer of £6,500 per mortgage to re-mortgage, upped to £8,850 per mortgage (x 12 mortgages!!!). However, they are complaining that it wasn't stated at the time BOI would up rates later if this wasn't succesful....if the BOI had stated that with the offers, they would have jumped. Surely two offers, meaning over 100k in cash to re-mortgage, citing capital reserves is enough to make these bright people think? I don't mean to be derogitory, but the "it wasn't my fault I wasn't spoon fed every single detail" posts after warning after warning and cash offers really does grate.

They are now organising a a collective approach, using twitter to try and up the costs for BOI assoiated with the complaints. As if thats gonna help their situation.

The only thing I do agree with them on is they shouldn't have to pay the £195 exit fee to remortgage. It should be free in my view. BOI are being a bit petty and ridiculous there.

chucknorris

Thrugelmir wrote: »

Probably because they have no idea what they are doing.

Anything they've earnt they've spent.

Rather than reinvesting and reducing the debt burden.

I think Graham's right, even if they spent it all the profit, they couldn't really be any worse off than when they originally took out the loan. Unless they have bought again at or near peak and were using the profit created from the low margin trackers to subsidise the newly (unprofitable) bought properties, that for me is the only plausible explanation.

EDIT: Which wasn't very shrewd to put themselves in that position because interest rates had to return to normal levels at some point. It was a disaster waiting to happen.

Thrugelmir

Graham_Devon wrote: »

Well the only thing I can think of is re-investing and getting more loans? Certainly the ones who have said this will cripple them all have multipe loans, whether that be on the thread in the mortgages section on here, on property118 or in the telegraph comments.

Like kids in a sweet shop. Rising prices. MEW the equity. No long term plan as to repaying the debt. As house prices will only ever rise.

Rather than taking a more measured view of repaying some of the debt first to increase profitability. Building up financial reserves before taking on the next property and so on.

grizzly1911

Moneybox R4 suggested, based on the legal advice they had sought they don't have any redress.

Boulger, as Dev pointed out, was suggesting formal complaints to hinder the process. Apparently it costs, lenders, £750 for each case referred to the Ombudsman. Collectively it may make them rethink but I wouldn't hold my breath.

Thrugelmir

grizzly1911 wrote: »

Boulger, as Dev pointed out, was suggesting formal complaints to hinder the process. Apparently it costs, lenders, £750 for each case referred to the Ombudsman. Collectively it may make them rethink but I wouldn't hold my breath.

Who will pay the £750?

The customer. So short sighted.