BoE 0.1% base rate, why aren't mortgage providers passing this on to eligible customers?

WillimS2020 · 31 March 2020 at 8:10PM

fewcloudy said:

Define "years ago" please? as I took one out in 2008. It certainly wasn't "not a good option" then, it was an alternative to buying a fixed rate mortgage.
As it happens, mine has turned out to be the best financial product I ever owned, by a country mile.
And I was employed not self-employed, so no SCM for me.
When the rates dropped almost month by month over 2009/10, the cut was passed onto me the 1st of the following month, without fail. It is in the terms of the mortgage, which unlike you, I seem to have to hand.
When the rates went up a tiny little bit in recent years, the increase was applied in just the same way, on the 1st of the following month.

Lets be honest with ourselves, we wouldn't (shouldn't ) know a APR or a BoE interest rate from a pigs foot, this is what the Banks/mortgage companies rely on, there is not many people out there who have a mortgage who actually know anything about it, that's why these banks/mortgage companies get away it, purely because we are financially IGNORANT, but will that stand up in a court of law, why not try it?

[Deleted User] · 31 March 2020 at 8:56PM

You may have a tracker mortgage but not be aware it has a limit on far it will drop. If you have one of these and you were not made aware then you may have a case against the person who sold the mortgage having not gone through the details with you.
If it does have a limit then it is is contractual and since you accepted their money it stands that you accepted the terms that they were lending on.

https://www.which.co.uk/money/mortgages-and-property/mortgages/types-of-mortgage/tracker-mortgages-al9x63k6ykdk#headline_6

What are 'collars' and 'caps'? Some tracker mortgages come with a minimum interest rate, known as a ‘collar’ or ‘floor’ (sometimes set at the deal's initial rate). Your interest rate will never drop below the collar, even if the base rate falls dramatically. For instance, if you were on a deal that meant you were paying the base rate plus 0.5% but your deal also had a collar of 0.6%, even if the base rate fell to 0%, you'd still pay at least 0.6% interest. Moneyfacts research in August 2019 found that nearly one in 10 tracker mortgages had a collar. Nearly all of these collars were set at the initial rate, meaning your interest rate would only ever be the same as or higher than it was at the start. Very occasionally, you might spot a tracker mortgage with a ‘cap’, which is a maximum interest rate. If your deal has a cap your interest rate will not go above it, regardless of whether the base rate exceeds it, for the duration of the cap (usually two or five years). Deals offering a cap tend to have higher initial rates, as you're paying for the security a cap offers.

LillythePink · 31 March 2020 at 9:10PM

I have a tracker mortgage with HSBC. So far, I received 2 letters - one after each drop in rate and advising me that my new standard payment would be £X WEF 25 April, more than a month since the rate reduction.

I reviewed my T&C's and it states that the new rate would be applied the day after the base rate change - therefore in my mind, i should have paid less on 25 March when my next payment went out.

I called them twice - once before 25 March to check that the rate had changed as the letter I was sent seemed ambiguous (why state the 25/4 date when i had a payment due on 25/3), then again when my full mortgage payment was deducted on 25 March with no reduction.

The mortgage person i spoke to assured me that the new lower rate was applied to my mortgage but unfortunately, their system was only set up for one rate change a month, so having 2 changes in one month wouldn't be supported.

I still think it's wrong but I'm not going to quibble over a few £ but i will take note when it changes upwards to see the dates the new rate is effective and challenge them on it at that point.

minimike2 · 31 March 2020 at 10:24PM

WillimS2020 said:

Don't you just love the responses from those who haven't a clue on the subject, 'go for a walk' or 'don't be so ridiculous'. I am just glad I am not paying for any of this 'expert' advice

Pot calling the kettle black much?

4 pages in and you STILL haven't even bothered to state what the terms of your product are, but you've been happy to spout off a lot of nonsense about mis-selling and a lot of other rubbish.
Lenders don't just make the rules up as they go along. If you didn't read, or have forgotten, the terms of your product and now want to moan that it doesn't do something you want it to, well there is only one person at fault.

Penelopa.Pitstop · 1 April 2020 at 12:03PM

Nationwide also has delay with applying second rate reduction. It might be possible, it's the same reason as HSBC, one reduction per month allowed by system. I got letter after first reduction and it was applied to my account from today, 1st of April.
Nationwide has following info on their website:
"On Thursday 19 March, the Bank of England announced a 0.15% decrease in the base interest rate. (...) The changes to mortgage rates will apply from 15 April 2020 and payments will change from 1 May 2020."
Nationwide doesn't have tracker floor since 2009.

kingstreet · 1 April 2020 at 4:57PM

Clearing banks like HSBC collect in arrears, so a payment on 23 March is for 23 Feb to 22 March, not 23 March to 22 April so suggesting your next payment on 23 April will be lower is correct. Usually rate changes are reflected on 1st of following month when an announcement has been made.