"Thousands" with BOE trackers face mortgage interest rate rise

james_toney

but also I would never take out an interest only mortgage, the're are just crazy if you maxed yourself on an IO mortgage,

shortchanged_2

Joeskeppi wrote: »

Seems quite harsh to make such a large change with short notice, but it's an insignificant amount of mortgages in the grand scheme of things.

Bank of Ireland aren't going to be selling mortgages to many new customers after this stunt thats for sure.

It's not just this though is it joeskeppi. It's about precedence.

This could be the start of something bigger. If one bank gets away with it, they'll all be at it and before you know it the 'thousands' becomes tens and even hundreds of thousands.

shortchanged_2

james_toney wrote: »

but also I would never take out an interest only mortgage, the're are just crazy if you maxed yourself on an IO mortgage,

Isn't this how a large number of BTl's are taken out these days, as in IO?

Graham_Devon

Joeskeppi wrote: »

Bank of Ireland aren't going to be selling mortgages to many new customers after this stunt thats for sure.

They don't want any new customers anyway. They are trying to reduce their book.

james_toney

shortchanged wrote: »

Isn't this how a large number of BTl's are taken out these days, as in IO?

yes some BTL are, but some on the other threads were residential on IO. I would not have IO for any , unless i was apying something down every month off the capital

IronWolf

Graham_Devon wrote: »

I found myself posting on that thread. Feel harsh now. However, apparently this is going to "ruin" quite a few people. One thinks he will now be reposessed.

Thing is, if 4.49% ruins people, surely theres a lot of gambling going on here? It's difficult to feel compassion for people who haven't thought about rates at 3%+ (taking their tracker to the 4.49% mark).

How are BTL's operating if this bankrupts them?!

Third, doesn't this highlight the problem with ultra low rates? How many "zombie" households are out there if people can't even afford the base rate to hit 3% without losing their home / BTL.

I understand them being angry, even though it is in the T&Cs, as stated by a couple of the BTLs on that thread. But can't really understand how people could be in such a position to lose their homes and BTLs over it. It's still a low rate compared to every decade gone past in the last century!

Exactly. I think this highlights that BTL is not a simple quick way to riches, it is an investment with ongoing obligations and risks which people need to actively monitor and have contingencies for, otherwise they can run into trouble.

shortchanged_2

james_toney wrote: »

yes some BTL are, but some on the other threads were residential on IO. I would not have IO for any , unless i was apying something down every month off the capital

Which in turn goes to highlight that many people who are on IO mortgages can't really afford the properties they are in.

IronWolf

This is also bringing to the surface the thousands that have been bailed out of repossession by record low interest rates. They are living on the breadline with rates at record lows, any movement in rates and they will lose their house.

StevieJ

HAMISH_MCTAVISH wrote: »

Just another instance of crooked banksters shamelessly reneging on agreements and screwing over their customers.

Looks like there will be some legal action taken, probably under mis-selling, as if the ability to change the banks margin was not clearly laid out to customers, and they thought they were buying a lifetime tracker at a margin above base, then hiding a get-out in the small print is unlikely to stand up to challenge.

Surely it has stopped them getting a good deal with a proper bank when they were on offer?

wotsthat

Graham_Devon wrote: »

Thing is, if 4.49% ruins people, surely theres a lot of gambling going on here? It's difficult to feel compassion for people who haven't thought about rates at 3%+ (taking their tracker to the 4.49% mark).

People exaggerate.

We saw a bit of this last year and the sky remained in the sky.

http://www.guardian.co.uk/money/2012/aug/22/santander-raise-svr-change-cap

Thousands of Santander mortgage customers on the lender's standard variable rate (SVR) face payment increases from October, following the bank's decision to increase the rate by 0.5 percentage points to 4.74%.

The lender said the move, which will add £26 a month to a £100,000 mortgage, had been driven by several factors, "most notably the fact that for the last three years the amount it costs us to provide mortgages and the rates we offer our savings customers have been increasing, despite the base rate remaining static". It added it had no intention of further increasing SVR.

The rise applies to Santander mortgage customers including those acquired under the Abbey for Intermediaries brand, but not those from Alliance & Leicester. The actual number of customers affected is confidential, but it is believed to be a few hundred thousand.