LIBOR question

Frankandann

Sorry to show my ignorance but I am looking for a little guidance before tackling my lender. I have a sub-prime mortgage with Kensington. The rate is LIBOR plus a MAXIMUM of 3%. I have recieved a letter this morning dated 30th August (slow post !) stating that from the 1st September the rate will increase to 10.8 %. I have done a bit of searching on'tinternet and from what I can ascertain the current LIBOR rate is around 6.7/6.8% though frighteningly it is forecast to rise substantially in the near future. However based on that current rate, which may have been even less at the end of August, my mortgage should be 9.8% at the most. Am I being ripped off ?

Conrad

No not ripped - off but a victim of circumstance.

This illustrates why I think house prices may fall. People have far more debt that in 1991 and many sub prime borrowers and those with second charges are going to be paying very high rates for now.

LIBOR + 3%. You might find additional loadings were made due to factors such as the application being self cert or featuring adverse credit details.

The only potentially cheaper options are the sub prime mortgages offered by Building Socities. You may find some brokers are'nt aware of such lenders. BS relevant include - Amber, Chelsea, Derbyshire (SALT) and a few more.

Frankandann

Comments noted Conrad. I am fully aware of the mortgage specifications. Circumstances at the time (2004) dictated the mortgage I was able to obtain. However my argument is with the rate now being charged. With a rate of 3% above LIBOR Kensington's charge of 10.8% would mean a LIBOR rate of 7.8% which to the best of my limited knowledge is not the case now or in the most recent past. My own cynical view is that they are jumping the gun in respect of recent events. On the subject of looking elsewhere - I wish. With a 60th birthday not far off and current unemployment that is not really an option.

Conrad

I have heard of people in a similar predicament switching to a B2L mortgage with a prime rate. They intended to let the place but , ermmm ended up staying and got to enjoy a much lower rate thatn the sub prime rate they were on (as in the recent past thier credit commitments had been met)