Forum Home» Mortgages & Endowments

fixed mortgages should banks gain from their sub-prime fiasco - Page 5

New Post Advanced Search
Important update! We have recently reviewed and updated our Forum Rules and FAQs. Please take the time to familiarise yourself with the latest version.

fixed mortgages should banks gain from their sub-prime fiasco

edited 27 March 2014 at 11:01AM in Mortgages & Endowments
153 replies 8.2K views
1235716

Replies

  • Thrugelmir wrote: »
    A total lack of understanding of how mortgages are financed. Along with a linking of totally unrelated issues.

    I would comment further but I'm beginning to feel like a broken record.

    The common theme these days is the lack of personal responsibility for peoples own decisions.

    A comment at all would be a start. I don't know why you feel like a broken record as you haven't said anything except your patronising drivel at the bottom of the thread.
    All issues linked are related to finance
    The common theme these days is that consumers are getting ripped off everywhere and every day we hear of different ways finance or gas/electric companies have come up with fleecing us.
    If you had the knowledge to come up wit an argument I may be able to reply but yet you have not,
    I have never claimed on PPI, I have never put in a false claim for an accident and I have never complained about previous fixed rates.
    If you want to debate speak up or shut up?????
  • edited 28 March 2014 at 8:24AM
    pjreadpjread Forumite
    963 posts
    Tenth Anniversary 500 Posts Combo Breaker
    ✭✭✭
    edited 28 March 2014 at 8:24AM
    I am totally capable of working out whether it would be cheaper or not at 6% fees it is not.

    Depends, 6% penalty in year 2 would mean 8 years of potentially for argument's sake a 2% lower rate? no idea on your LTV or rates at the time, or when you believe this somehow became the 'wrong' product for you (surely not day 1?) but there are scenario's with a long fix where I could see myself considering paying that.

    That said I doubt there's been a much better rate on a ten year fix at any point, so you wouldn't have had the certainty. You got *exactly* what you signed up to, and I really don't think you could have done much better with the best luck in the world, assuming you wanted a long fix!
  • tom9980tom9980 Forumite
    1.9K posts
    Part of the Furniture 1,000 Posts Name Dropper I've helped Parliament
    ✭✭✭
    OP you have no complaint, you just don't seem to understand that. You got what you asked.
    When using the housing forum please use the sticky threads for valuable information.
  • pjread wrote: »
    Depends, 6% penalty in year 2 would mean 8 years of potentially for argument's sake a 2% lower rate? no idea on your LTV or rates at the time, or when you believe this somehow became the 'wrong' product for you (surely not day 1?) but there are scenario's with a long fix where I could see myself considering paying that.

    That said I doubt there's been a much better rate on a ten year fix at any point, so you wouldn't have had the certainty. You got *exactly* what you signed up to, and I really don't think you could have done much better with the best luck in the world, assuming you wanted a long fix!

    Every year I sit down and do the maths on how much it would cost on what is available against what I am currently paying with fees etc. It has never been cheaper.
    Our LTV would currently be about 10% and this is down to us always looking around and not the banks. We have got where we are in spite of them.
    Obviously 3 years ago we would only have needed a 5 year fix, as we were halfway through the 10 year term and less than 2% fix was available but it was still not worth us paying the exit fees.
  • tom9980 wrote: »
    OP you have no complaint, you just don't seem to understand that. You got what you asked.

    Thanks for the in depth view
  • Important update! We have recently reviewed and updated our Forum Rules and FAQs. Please take the time to familiarise yourself with the latest version.
  • Thanks for reply.

    We had come to the end of a deal with Nationwide and were moving property from a house we had just extended.
    We were getting a bigger property but were downsizing our mortgage as we had done up a house in a lovely rural spot.

    We were not advised we looked around all comparison and finance section compares and came to the conclusion this was by far the best deal for what we were looking to do and we paid a fee for the deal.

    We still maintain this was a good deal under the circumstances we were aware existed. I still fail to see why people think this odd.

    I have no complaints on the staff we dealt with in Barclays whatsoever.
    If there was any underhand business (and I haven't stated anywhere I think there was) it would be higher up the chain.

    It is about principal as to why I make the complaint. Everyone's circumstances are different.


    Of course you can complain, that is your right, yet having read through your posts it seems that all you're complaining about is the fact that the banks may or may not have known of an impending banking crisis.


    I fear that you will only succeed in failing in your complaint that Woolwich Barclays knew what was going on as early as 2006 as:


    1. It was in 2008 the UK Banking crisis took place.

    2. The Treasury was approached in 2007 by Northern Rock as "lender of last resort" because NR was unable to obtain further lines credit to continue trading.

    3. Interest rates dropped from 2008 as the UK government was determined to avoid a recession akin that of the 1920's pale into insignificance.

    4. I sat through various industry presentations given by a Woolwich Director involved in mortgages in 2007 predicting interest rates were to rise.


    Financial markets are very volatile and whilst it is said a week in politics is a long time, a day in finance is an eternity!
  • pjreadpjread Forumite
    963 posts
    Tenth Anniversary 500 Posts Combo Breaker
    ✭✭✭
    Every year I sit down and do the maths on how much it would cost on what is available against what I am currently paying with fees etc. It has never been cheaper.
    Our LTV would currently be about 10% and this is down to us always looking around and not the banks. We have got where we are in spite of them.
    Obviously 3 years ago we would only have needed a 5 year fix, as we were halfway through the 10 year term and less than 2% fix was available but it was still not worth us paying the exit fees.

    So
    *you're on 4.98%
    *you say you could have got 5yrs at under 2% 3yrs ago, so lets say 2% to be 'pessimistic'. I'll assume no fees which might offset the 'under 2%' you state.
    * Lets assume you owe 100k at that point, it doesn't really matter as it's about percentages...

    £100k at 4.98% over 5yrs = £113,172 total
    £100k plus 6% penalty = £106k. At 2% over 5 yrs = £111,477
    Saving from paying exit = £1,695

    Not huge but a definite saving unless "under 2%" means 1.99% with a £2k fee.
  • AndyT678AndyT678 Forumite
    756 posts
    Our issues are:-

    A. It has always seemed unfair that we have suffered by paying a higher rate and the banks have benefited as a result of their bad financial practices.
    B. Did they know this was about to happen and where therefore offering lower rates to entice as many people in before the event.

    Wikipedia states that the banks became aware of the sub-prime bomb in the summer of 2006.

    Do people think Woolwich knew and is it fair they have gained from the banking bad practise they were part of.
    This may refer to other lending institutes.

    So to paraphrase...
    1. You believe that the management of Woolwich BS knew of the impending global financial crisis in Aug 2006.
    2. The management of Woolwich BS also knew for certain that this would result in a period of record low intrest rates starting 3 years later in 2009.
    3. Because of this the Woolwich BS were both
      1. A - Charging you a higher rate than they could have done based on their knowledge that BoE rate would be at record lows in 3 years time. AND
      2. B - Offering artificially low rates to "entice people in."
    4. As a result they have made a grossly inflated profit from this loan.
    Is that a fair summary? If not why not?

    Do you understand how ludicrous it sounds to an objective reader?
  • AndyT678 wrote: »
    So to paraphrase...
    1. You believe that the management of Woolwich BS knew of the impending global financial crisis in Aug 2006.
    2. The management of Woolwich BS also knew for certain that this would result in a period of record low intrest rates starting 3 years later in 2009.
    3. Because of this the Woolwich BS were both
      1. A - Charging you a higher rate than they could have done based on their knowledge that BoE rate would be at record lows in 3 years time. AND
      2. B - Offering artificially low rates to "entice people in."
    4. As a result they have made a grossly inflated profit from this loan.
    Is that a fair summary? If not why not?

    Do you understand how ludicrous it sounds to an objective reader?

    My post is on 2 fronts and the 2nd was that even if they didn't know the results were still the same.
    I've been paying more than what has been available due to bad banking practices.
  • ThrugelmirThrugelmir Forumite
    75.3K posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭✭
    If you want to debate speak up or shut up?????

    Ok. Let's simplify your point to the real crux of the matter.

    To fund your 10 year fix term mortgage the lender will have obtained a tranche of funds also for 10 years. The lender would not have funded your mortgage with variable rate funds. The reason for this is the very low margin made on mortgage lending. Lenders fix their profit margins. Not sound practice to lend fixed money against risk variable interest rates. By fixing both sides a lender locks in their profit for the duration of the term.

    At the time you obtained your mortgage, the margin would have been well under 1% gross. This is before the bank covered operational overheads, taxation, regulatory fees, profit and shareholders dividends.

    To cover themselves against either actual loss or loss of profit if the borrowing party wishes to exit the contract early. Then the lender impose ERC's. These are clearly stated at the outset and are contractual terms. So responsibility has to lie with the borrower when applying for and accepting these terms.

    There's no grounds to complain now because of subsequent events.

    Shall I shut up now? Though happy to clarify anything I've written.
    "The human understanding when it has once adopted an opinion ... draws all things else to support and agree with it." - Francis Bacon (1561 – 1626)
This discussion has been closed.

Quick links

Essential Money | Who & Where are you? | Work & Benefits | Household and travel | Shopping & Freebies | About MSE | The MoneySavers Arms | Covid-19 & Coronavirus Support