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  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 3rd Oct 12, 8:03 AM
    • 2,324Posts
    • 971Thanks
    Former MSE Helen
    MSE News: Homeowners hit by Santander mortgage rise
    • #1
    • 3rd Oct 12, 8:03 AM
    MSE News: Homeowners hit by Santander mortgage rise 3rd Oct 12 at 8:03 AM
    "Hundreds of thousands of customers will see their standard variable rate soar ..."

Page 1
    • worried jim
    • By worried jim 3rd Oct 12, 8:27 AM
    • 10,818 Posts
    • 17,025 Thanks
    worried jim
    • #2
    • 3rd Oct 12, 8:27 AM
    • #2
    • 3rd Oct 12, 8:27 AM
    This is the letter I got back in August-

    "Only two things are infinite-the universe and human stupidity, and I'm not so sure about the universe"
    Albert Einstein
    • squeeks
    • By squeeks 3rd Oct 12, 9:44 AM
    • 304 Posts
    • 230 Thanks
    squeeks
    • #3
    • 3rd Oct 12, 9:44 AM
    • #3
    • 3rd Oct 12, 9:44 AM
    Homeowners hit by Santander mortgage rise
    Originally posted by MSE Helen
    Surely the title of this article is wrong. It should be Santander SVR mortgage holders hit by mortgage rises or similar. With an emphasis on the Variable part...

    If you own your home outright (i.e. a home owner!) or you have a mortgage with another provider you don't give a fig?
    Last edited by squeeks; 03-10-2012 at 9:47 AM.
  • DannyboyMidlands
    • #4
    • 3rd Oct 12, 11:49 AM
    • #4
    • 3rd Oct 12, 11:49 AM
    So what? It's a variable rate.
    • leitmotif
    • By leitmotif 3rd Oct 12, 3:40 PM
    • 302 Posts
    • 159 Thanks
    leitmotif
    • #5
    • 3rd Oct 12, 3:40 PM
    • #5
    • 3rd Oct 12, 3:40 PM
    So what? It's a variable rate.
    Originally posted by DannyboyMidlands
    Exactly. It is in the process of varying, which is what it should be expected to do. And still very low.
    • Credit-Crunched
    • By Credit-Crunched 3rd Oct 12, 5:37 PM
    • 2,114 Posts
    • 4,139 Thanks
    Credit-Crunched
    • #6
    • 3rd Oct 12, 5:37 PM
    • #6
    • 3rd Oct 12, 5:37 PM
    What is your next story Helen

    "Halifax 2 year fixed rate mortgage has kept payments fixed for 2 years"
    • dunstonh
    • By dunstonh 3rd Oct 12, 5:57 PM
    • 98,597 Posts
    • 67,050 Thanks
    dunstonh
    • #7
    • 3rd Oct 12, 5:57 PM
    • #7
    • 3rd Oct 12, 5:57 PM
    Sorry Helen but this is sensationalist rubbish. Variable rates go up and down. That is their nature. An adjustment of 0.5% p.a. is the typical scale of movement that occurs in either direction historically. To refer to the rate as soaring is just plain wrong.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • opinions4u
    • #8
    • 3rd Oct 12, 6:00 PM
    • #8
    • 3rd Oct 12, 6:00 PM
    What is your next story Helen

    "Halifax 2 year fixed rate mortgage has kept payments fixed for 2 years"
    Originally posted by Credit-Crunched
    Unless you had fees debited to the mortgage when it commenced .
    • tifo
    • By tifo 3rd Oct 12, 9:36 PM
    • 1,186 Posts
    • 262 Thanks
    tifo
    • #9
    • 3rd Oct 12, 9:36 PM
    • #9
    • 3rd Oct 12, 9:36 PM
    Why is the increase higher on an interest only mortgage rather than capital repayment? Surely the SVR is the same on the capital balance except that the borrower pays slightly more to repay some of the mortgage?
    • vacheron
    • By vacheron 4th Oct 12, 10:53 AM
    • 1,017 Posts
    • 997 Thanks
    vacheron
    Why is the increase higher on an interest only mortgage rather than capital repayment? Surely the SVR is the same on the capital balance except that the borrower pays slightly more to repay some of the mortgage?
    Originally posted by tifo
    Because the figures for repayment are based on the 15 year point, at which you would have repaid a significant amount of the original capital leaving a lower balance remaining to pay interest on.

    If you had just started the repayment mortgage the values would have been similar.
    • tifo
    • By tifo 4th Oct 12, 11:04 AM
    • 1,186 Posts
    • 262 Thanks
    tifo
    Because the figures for repayment are based on the 15 year point, at which you would have repaid a significant amount of the original capital leaving a lower balance remaining to pay interest on.

    If you had just started the repayment mortgage the values would have been similar.
    Originally posted by vacheron
    I don't know about that.

    The above info is on the 'mortgage balance' so a balance of £50k would increase by £21 on an interest only mortgage but £13 on a capital repayment mortgage. Nowhere does it say the balance would be lower for the latter.

    Same mortgage balance and same interest rate ... so why the difference in increase?

    I do understand what you're saying though ....

    If you use their website's calculator, my increase is much higher than they calculate .... about £10 more actually.
    • vacheron
    • By vacheron 4th Oct 12, 11:46 AM
    • 1,017 Posts
    • 997 Thanks
    vacheron
    Good point. So looking at the column that says "mortgage balance" I believe they have worked it out as follows:

    Interest only would result in paying interest on 50K every month for the next 15 years as the capital, and therefore the monthly interest amount will never reduce.

    On a repayment mortgage however, the interest element payable each month will be slowly be reducing over the 15 years, however, just like a new mortgage, they have averaged the total payable interest over the 15 years, which is where the lower figure comes from.
    • vacheron
    • By vacheron 4th Oct 12, 11:54 AM
    • 1,017 Posts
    • 997 Thanks
    vacheron
    Doing the calcs:

    repayment
    50K over 15 years @ 4.24%, = £375.89pm (total interest payable: £19.921)
    50K over 15 years @ 4.74%, = £388.56pm (total interest payable: £22.551)
    difference by my reckoning = £12.67

    interest only
    50K @ 4.24%, = £176.66pm
    50K @ 4.74% = £197.50pm
    difference by my reckoning=£20.83
    Last edited by vacheron; 04-10-2012 at 12:06 PM.
    • matchmade
    • By matchmade 4th Oct 12, 2:25 PM
    • 57 Posts
    • 41 Thanks
    matchmade
    These SVRs are pretty opaque things: what's to stop Santander or any other SVR-using bank from increasing the rate to 5.75% or 6.75%? It's easy to say that customers will just switch to another product, but with the mortgage famine, extemely strict lending criteria and the collapse in house prices meaning people have very poor LTVs or even negative equity, many people will be trapped with Santander and just have to pay up.

    In other words, where are the FSA controls on these SVR rates, and the protection for the consumer from being ripped off by arbitrary changes? At least you know where you are with rates set as a percentage above base rate, but SVRs seem like a throwback to the 1970s and earlier, when mortgage and endowment providers liked to keep everything murky and it was very difficult to see what charges you were paying or how the interest rate was calculated.
    • dunstonh
    • By dunstonh 4th Oct 12, 2:46 PM
    • 98,597 Posts
    • 67,050 Thanks
    dunstonh
    These SVRs are pretty opaque things: what's to stop Santander or any other SVR-using bank from increasing the rate to 5.75% or 6.75%?
    Nothing. Just as any retailer in the country can retail products at a price it wishes.

    In other words, where are the FSA controls on these SVR rates,
    Why should the FSA control it?

    protection for the consumer from being ripped off by arbitrary changes?
    Yay, another day, another rip-off accusation. Typical MSE poster.

    At least you know where you are with rates set as a percentage above base rate, but SVRs seem like a throwback to the 1970s and earlier, when mortgage and endowment providers liked to keep everything murky and it was very difficult to see what charges you were paying or how the interest rate was calculated.
    SVRs are heavily influenced by supply of money from other sources, such as deposits and external financing. As such, putting a cap or restriction on it would restrict borrowing even further.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • tifo
    • By tifo 4th Oct 12, 8:46 PM
    • 1,186 Posts
    • 262 Thanks
    tifo
    Nothing. Just as any retailer in the country can retail products at a price it wishes.
    Originally posted by dunstonh
    Yes, but banks are not allowed to go 'bust' like any retailer. Maybe they don't need the taxpayer bailout if they're making so much from higher interest rates on everything.

    Then again it's only small/medium retailers that are allowed to fail. Others get govt 'help' in subsidies. Maybe because they use their influence with the number of jobs that will be lost if they are allowed to 'fail'.
    • jimjames
    • By jimjames 4th Oct 12, 8:59 PM
    • 13,252 Posts
    • 12,320 Thanks
    jimjames
    What is your next story Helen

    "Halifax 2 year fixed rate mortgage has kept payments fixed for 2 years"
    Originally posted by Credit-Crunched
    These headlines seem to have a great tendency to overstate numbers. An increase of 0.5% in the rate can hardly be counted as soaring any more than claims of a share price drop of 1% being a "stock market slump" can be justified.

    Dramatic words make headlines but generally don't have any basis in reality.
    Last edited by jimjames; 04-10-2012 at 9:01 PM.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Thrugelmir
    • By Thrugelmir 4th Oct 12, 10:01 PM
    • 64,857 Posts
    • 57,224 Thanks
    Thrugelmir
    Yes, but banks are not allowed to go 'bust' like any retailer.
    Originally posted by tifo
    Hence the changes being introduced and the proposed changes. Since 2008 banking has changed and will continue to do so for some time.
    “If the financial system has a defect, it is that it reflects and magnifies what we human beings are like. Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong. Booms and busts are products, at root, of our emotional volatility.”
    ― Niall Ferguson
    • squeeks
    • By squeeks 5th Oct 12, 9:51 AM
    • 304 Posts
    • 230 Thanks
    squeeks
    In other words, where are the FSA controls on these SVR rates, and the protection for the consumer from being ripped off by arbitrary changes? At least you know where you are with rates set as a percentage above base rate, but SVRs seem like a throwback to the 1970s and earlier, when mortgage and endowment providers liked to keep everything murky and it was very difficult to see what charges you were paying or how the interest rate was calculated.
    Originally posted by matchmade
    The base rate is even more arbitrary than a banks SVR. With a bank SVR at least you can move to another provider. If the base rate 'jumped' to 10% there isn't a whole lot you can do about it short of lobbying your MP or organising a protest. If all products were pegged to the base rate, you really would be screwed as you would have no choice.
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