Santander Mortgage Stuck on Standard Rate

Ronaldo_Mconaldo

The point is that the OP can't go anywhere else so Santander will gouge as much money out of them as they can because the OP has no choice and can't move. A customer with a good credit record can easily move, and probably will, to the lender with the lowest rates so Santander will tempt them to stay with a better offer. Although Santander are giving you the choice; stick with them or move to a smaller house.

kingstreet

Ronaldo_Mconaldo wrote: »

The point is that the OP can't go anywhere else so Santander will gouge as much money out of them as they can because the OP has no choice and can't move. A customer with a good credit record can easily move, and probably will, to the lender with the lowest rates so Santander will tempt them to stay with a better offer. Although Santander are giving you the choice; stick with them or move to a smaller house.

Yep. So the FCA's transitional arrangements and requirement for lenders to treat customers fairly - all customers, not just those with perfect unsecured credit repayment record, are completely ignored.

... and yes, after thirty years doing this I understand risk pricing and all the rest of it. Sticking someone with SVR may be right contractually, but it doesn't and shouldn't make it morally justifiable especially on here.

Brock_and_Roll

Ronaldo_Mconaldo wrote: »

Although Santander are giving you the choice; stick with them or move to a smaller house.

Sounds fair enough.....

kingstreet

Brock_and_Roll wrote: »

Sounds fair enough.....

That's what the transitional arrangements are supposed to cover. Situations where there is no increase in the borrowings, eg a reduction in both loan amount and LTV and lenders are refusing to apply them.

Hence creating mortgage prisoners against the letter and the spirit of regulation.

mrginge

I know you like my little analogies so here's a new one.

I own a pie business and i sell pies on the internet to people for £1 a pie.
I also have a shop where i sell pies for £1.50.

The pie shop regulator comes along and tells me i must make sure people can afford pies. He also tells me that my customers who cant afford the internet but love my pies should really be able to continue to buy pies from my shop but they should only have to pay the internet rate.
I tell him that i charge more from the shop because it costs me more to run it, so i'd have to increase the cost of internet pies to cover this lost revenue.
The pie regulator says well ok then you make up your own mind, i'm not going to force you.

Three months later, people in my shop complain that i'm ripping them off despite me doing nothing different to three months ago while the regulator basks in the glory of coming up with a stupid 'arrangement' that he isn't prepared to enforce anyway because he knows it would be suicide to have to explain why his rule had pushed up the cost of pies for the majority of people who buy pies off the internet.

amnblog

The pie regulator tells you that your existing customers can continue to benefit from your 'piecard-member' price of £1.25.


You tell your 'piecard-members' that the rules from the pie regulator means you have to charge them £1.50

mrginge

Ah but the piecard is a special discount card, that costs £10 and last for a year.
If the customer cant afford to renew their piecard then they don't get the discount.

plane_boy2000

amnblog wrote: »

Do BT charge you more because you did not pay your gas bill?

BT charge you in advance, and cut you off when you don't pay.

Their risk and exposure is slightly different here, plus if you don't pay your gas bill you end up on a prepayment meter where you cant get the best deals, so in essence it works in a similar way

kingstreet

Further developements;-

http://www.mortgagestrategy.co.uk/2016292.article?cmpid=msbreak_683560

Lenders fear retrospective action over transitional arrangements

Lenders say the transitional arrangements written into the MMR are not being used properly as they fear retrospective action from the regulator.

The intention of the transitional rules was to help existing borrowers who would have become unfairly trapped with their lender as a result of the MMR.

The transitional rules allow lenders to waive affordability checks and interest-only rules for borrowers who may be trapped under the new rules as long as the customer does not wish to borrow more money, there is no “material impact” on affordability and they have a good payment history. They apply to borrowers staying with their current lender and those who want to switch to a new lender.

But brokers have complained that most lenders are applying full affordability checks on borrowers and subsequently rejecting the application to switch to a cheaper product, even though the transitional arrangements mean they do not have to.

Speaking at a roundtable hosted by Ipswich Building Society last week, Ipswich chief executive Paul Winter said lenders fear what the regulator will think if they take advantage of the transitional arrangements.

He said: “Most of that [not implementing the arrangements] is around the fear of what will the regulator say when it comes and visits and we have all of these cases that appear to fail affordability.”

While BSA head of policy Paul Broadhead (pictured) said it would be “unforgivable” for lenders not to apply the rules to existing borrowers, he agreed that lenders were nervous of the regulator, which has itself expressed its concern that the arrangements have not been used as expected.

Broadhead said: “I think warnings like ‘be afraid, be very afraid’ and ‘shoot first and ask questions later’ when the regulator was born were still very much ringing in lenders’ ears [when the MMR was introduced].

“While the FCA has since softened its tone, there is still an element of nervousness among the lending community as about how they deal with some of the more open-to-interpretation elements of the rules.”

Association of Mortgage Intermediaries chief executive Robert Sinclair says: “We have heard of situations where the customer has been told they cannot afford a new loan despite it being hundreds of pounds less than the revert-to rate they are currently on.”

The roundtable panel added lenders may be less fearful after two MMR thematic reviews are published next year as they will have an idea of what bad practice looks like when it comes to applying the transitional arrangements.

However, Sinclair says: “I think some of them are waiting to see what comes out of that but that will not appear until next June. So if they then want to take changes to policy through the proper processes, then consumers won’t see any change until November next year. That is too long for me in some circumstances.”

Thrugelmir

kingstreet wrote: »

Further developements;-

Seems as if the lessons of the credit boom era of 1995 - 2007 haven't registered in certain quarters. Much of the noise is eminating from brokers. I would like to know what expertise these "experts" have in either banking and finance. As much of what I've heard suggests very little.