Banks refusing to renegotiate existing mortgages

FranzG

Just tried today to renegotiate our mortgage with existing lender (15 years) as we do every 2-3 years.
Have been left totally speechless - thats why I'm writing here.....

BOS/Halifax say, but will not put in writing, we cannot afford what we already have (never ever missed a payment) and therefore as the NEW system from April 2014 says DECLINE we are stumped. We have 3xtimes equity/loan available in the property They will not give us a lower rate (2.9/2 years which would be more affoardable) nor a longer term (again more affoardable).
New system in place has NO appeals process!!! nor does it have any "higher up person" or any human overide function. We are therefore assessed as a NEW lender and not eligable for any change to our current product.
They gave us 2 weeks notice that product was ending (as they did to all their customers apparently)and that meant we were immediately on the higher variable rate(up £150/month) - but this they say we CAN affoard!!!! They say it's a Goverment Rule to be responsible lenders and we are a bad risk (after 15 years)- but they are making us pay more than we can affoard now - and if the rates go up we will have to sell - How the ??? does that make sense?????

Thrugelmir

Mortgage lending is priced on risk. Just in the same way that credit cards have a wide spectrum of rates. So those customers with a better rating can obtain cheaper funds. In this context it has to be remembered that funds are finite as well.

Bank bashing was a popular past time. Now they are operating as they should. They get bashed again. Whereas this time it's not the banks fault.


So the issue is in your personal circumstances. If you cannot afford the mortgage increase with interest rates at record lows for 5 years. Then the lender considers you a risk as interest rates normalise. Returning ultimately to a 6% - 7% range in the future.

Do you have unsecured debt?

dunstonh

BOS/Halifax say, but will not put in writing, we cannot afford what we already have (never ever missed a payment) and therefore as the NEW system from April 2014 says DECLINE we are stumped. We have 3xtimes equity/loan available in the property They will not give us a lower rate (2.9/2 years which would be more affoardable) nor a longer term (again more affoardable).

Changing the term of the mortgage would require new underwriting and the MMR requirements would come into play. Some lenders are treating new deals on unchanged borrowing amount/term the same as new applications. Others are not. This is a judgement call at the moment and playing it safe within the regulators requirements. However, this may change as a deal change is not really what the MMR was about.

They say it's a Goverment Rule to be responsible lenders and we are a bad risk (after 15 years)- but they are making us pay more than we can affoard now - and if the rates go up we will have to sell - How the ??? does that make sense?????

It is not the Government. it is the regulator.

Whilst i can see why you are frustrated, i can also see why the lenders are following the guidelines laid out. These guidelines are new and interpretations will differ and will settle down over the comings months.

Halifax is committed to your mortgage as you bought it and is not breaking any rules or doing anything wrong. You are the one looking to break the contract and take out a new one. So, if they want to apply current mortgage lending criteria to it, then they are allowed to do so. They may well be happier for you to take your borrowing elsewhere to reduce the risk on their book.

caprikid1

By your own admission you cannot afford the mortgage if the rate goes up as it has.

If a lender decides you no longer fit its new criteria then they won't offer you a new deal.

High risk low price does not make sense.

"They may well be happier for you to take your borrowing elsewhere to reduce the risk on their book."

ethank

You are being priced to leave - if you can find a better offer, they are happy for you to take your business elsewhere. Lots of banks do it...

Bantex_2

After 15 years and with current rates, a mortgage should be peanuts.

Thrugelmir

Bantex wrote: »

After 15 years and with current rates, a mortgage should be peanuts.

More to the tale.

but they are making us pay more than we can affoard now

DevCoder

SVR is what 4%?

If you cannot afford that, then you can't meet the now normal lending criteria of 7%

RedDwarf82

This is what the FCA says about the MMR and existing mortgages:

fca.org.uk/consumers/financial-services-products/mortgages/mortgage-market-review/affording-a-mortgage

Changing an existing mortgage

If you already have a mortgage and want to remortgage, a lender may be able to arrange this without doing all the affordability checks.
The lender will still have to do the checks if you are:

increasing the amount you are borrowing
making a change that might affect what you can afford (for example, extending a mortgage into your retirement, or removing someone from the mortgage contract)

Thrugelmir

RedDwarf82 wrote: »

This is what the FCA says about the MMR and existing mortgages:

More than likely this a straight forward credit check. So the lender has declined the application on the basis of what's contained in the report. Which seems fair enough as the lender is not penalising the borrower. Merely letting the interest rate default to that of standard SVR. A sound commercial decision.

dunstonh

If you already have a mortgage and want to remortgage, a lender may be able to arrange this without doing all the affordability checks.

"may be able to"... "without all".... Lots of nice vagueness there.