Short Term Fixed Rate Mortgages - Were they Mis-Sold?

A_Nice_Englishman

minimike2 wrote: »

Or maybe between taking out the mortgage and now, people have gone out and got £25k loans, secured loans, cars on HP etc and now have outgoings £400 a month more than when they made thier mortgage application.

Quite possibly! But the fact that mortgage rates may increase and discounts no longer be available when the discounted fixed rate came to an end should have been taken into account when the additional borrowing was agreed.

poppy10_2

A_Nice_Englishman wrote: »

That was my point. Should the mortgage have been taken out if the borrower couldn't afford the real cost without the discount (based on interest rates at the time, of course)

But so many mortgage brokers were telling people they would never need to go onto the SVR - "You can just re-mortgage onto another discounted deal in 2-years time when your house price has risen." This was irresponsible, and there is certainly a case to be made for misselling in these circumstances.

A_Nice_Englishman

poppy10 wrote: »

But so many mortgage brokers were telling people they would never need to go onto the SVR - "You can just re-mortgage onto another discounted deal in 2-years time when your house price has risen." This was irresponsible, and there is certainly a case to be made for misselling in these circumstances.

Bet the brokers never put in writing though!

MarkyMarkD

But most people still can remortgage at the end of their 2 year fixed or discounted rate. It's just that the rates they can remortgage onto are higher than they were.

Nobody ever told borrowers that they could remortgage to the same, or a lower, rate at the end of their incentive term. All they would have said is that the SVR rate is fairly irrelevant, because they could remortgage and pay less. Which is still true for almost everyone.

The few people who currently cannot remortgage are Northern Rock borrowers (mainly) on loans over 95% of their present property value, which means they typically borrowed 100% or more. These are a very small proportion of the total mortgage market.

And these borrowers shouldn't have expected to be able to remortgage at the end of their term - hardly anyone else offered such loans at the time NR started doing them. Even if they expected NR might have offered them another deal, NR's switcher fees plus product fees made the savings relatively small - people only did it to keep their payments down whilst adding more and more fees to the debt IMHO.

Dan_Collins_2

For crying out loud. The borrower can see the SVR, affordability is used when underwriting a case. Could you imagine if a lender said no you cant have that mortgage because one day our SVR may be 15%! Or maybe the client should be sent to prison for fruad, they have to confirm that they can afford the mortgage now and in the future!

We cannot be expected to predict the future, we are not mystic meg!

Poppy10, you can still remortgage and you dont have to go on the SVR unless you are an extreme case!

Sorry this post is a pile of crap and this is the kind of thing that is making this industry so hard to work in!

Mortgages are not the problem. Unsecured debt is the real issue in this country!

Dawes_2

Can't really be mis-sold, all because every mortgage is sold with a clear overall cost for comparison

minimike2

Dan its our fault for not predicting the credit crunch. Didn't you know?

Some people will always point the finger at brokers...

poppy10_2

Dan_Collins wrote: »

Poppy10, you can still remortgage and you dont have to go on the SVR unless you are an extreme case!

Have you read the Northern Rock thread?

dreamylittledream

poppy10 wrote: »

Have you read the Northern Rock thread?

To be fair the Together product is hardly the typical situation for the majority of borrowers.

MarkyMarkD

Dan's comment is quite correct. Together mortgage borrowers are an extreme case.

As others have said, since mortgage regulation it has been compulsory to list the repayment amounts in each part of the mortgage term, clearly showing what the monthly cost will be at SVR and the impact of rate changes on that amount.

If people assumed that they could always switch, they were wrong to do so.

And no mortgage was sold with a guarantee of subsequent switchability.