MSE Northern Rock comment

[Deleted User]

MarkyMarkD wrote: »

By selecting your fixed rate product now, as well as locking in today's rates, you also lock in today's end dates and effectively lose a few months of fixed rate.
(NB - this point doesn't apply to Nationwide as their 2 year fixed products actually last two years. But it does apply to nearly every other lender).

I've just negotiated a new 2 year tracker with Nationwide to replace my current Nationwide tracker which is due to end early next year. I can see the point of not setting up a new fixed rate deal now if fixed rates are dropping but I think that the opposite currently applies to tracker rates.
I'm surprised by your comment about losing a few months of fixed rate. Surely, if a 2 year product is set up to start at a future date eg Dec 2007 then it would run for 2 years until Dec 2009 or am I missing something?
Regards,
C.R.

MarkyMarkD

savingpennies wrote: »

"there’s nothing wrong with sorting and agreeing your mortgage now, even if you don’t need it until December.”

You don't need to lose a few months fixed interest - as it says you can agree a mortgage now but don't take it up until your current one ends.

That's not how fixed rate mortgages work, at least with every lender apart from Nationwide. The term END date is determined by when you apply, not when you actually switch (or complete in the case of a non-remortgage).

MarkyMarkD

CR10 wrote: »

I've just negotiated a new 2 year tracker with Nationwide to replace my current Nationwide tracker which is due to end early next year. I can see the point of not setting up a new fixed rate deal now if fixed rates are dropping but I think that the opposite currently applies to tracker rates.
I'm surprised by your comment about losing a few months of fixed rate. Surely, if a 2 year product is set up to start at a future date eg Dec 2007 then it would run for 2 years until Dec 2009 or am I missing something?
Regards,
C.R.

As I said, for fixed rates this applies only with Nationwide. With tracker/discounted rates, you get the headline term with all lenders.

xxdeebeexx

“People queuing outside Northern Rock to withdraw savings need to calm down. Firstly, it’s enormously, unthinkably unlikely the bank will go bust. Yet even if it does, all savings up to £35,000 are protected by the Financial Services Compensation Scheme, which means the first £2,000 of your savings are protected and 90% of the next £33,000 are.”

Hi Thanks for the reassurance but does this apply to per person or per account. My parents have 3 accounts between them. Mum has £20,000 which is covered by the scheme but dad has 2 accounts 1) £26,000 and 2) 31,000 both covered individually but not together. I would really like some help with this . I have looked through the threads (Loads and loads of times) but that awful sick feeling won't seem to go away.

TIA

Dx

MSE_Martin

There is now a new guide to the crisis

http://www.moneysavingexpert.com/banking/Northern-Rock-Crisis

digerati

xxdeebeexx wrote: »

... Thanks for the reassurance but does this apply to per person or per account. My parents have 3 accounts between them. Mum has £20,000 which is covered by the scheme but dad has 2 accounts 1) £26,000 and 2) 31,000 both covered individually but not together.

In the unlikely event that Northern Rock goes bust your Mum will get maximum compensation of £2000 + (£18000 x .90) = £18200, your Dad will get £2000 + (£29000 x .90) = £28,100 (on the £31000 account) and ZERO on the other. This is why it's so important to spread the risk between different banks and financial institutions. Also I'd advise you confirm with your parents that NONE of the accounts are "joint" as that can affect compensation.

It would be advisable to promptly withdraw the funds from your Dad's larger account and deposit it at another bank or financial institution.

Under the Financial Services Compensation Scheme your first £2000 is secured, but only 90% of the next £33000 (£29700) resulting in a maximum payout of £31,700 per depositor at that bank. Any amount above the first £35000 is not covered, nor are multiple accounts (including joint) held by the same person.

I would suggest that the run on Northern Rock is a good time for everyone to re-evaluate their financial investments and deposits and confirm that they don't have too much exposure to any one bank or financial institution (including subsidiaries or affiliates). The important thing is not to panic.

aleph_0

digerati wrote: »

In the unlikely event that Northern Rock goes bust your Mum will get maximum compensation of £2000 + (£18000 x .90) = £18200, your Dad will get £2000 + (£29000 x .90) = £28,100 (on the £31000 account) and ZERO on the other.

Are you sure, can you give a link or something? I understood (admittedly just from a rough understanding of the rules) that people were covered for up to the £35 limit over all accounts (so I thought that £4,000 of the £29k was covered). Obviously this still leaves £25k with no protection whatsoever.