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Results: Is it fair banking institutes have gained with fixed rate mortgages just before sub-p

Yes

70.59% • 24 votes

No

23.53% • 8 votes

Don't know

5.88% • 2 votes

You may not vote on this poll

34 votes in total.

  • FIRST POST
    jonesoswestry
    fixed mortgages should banks gain from their sub-prime fiasco
    • #1
    • 26th Mar 14, 5:57 PM
    fixed mortgages should banks gain from their sub-prime fiasco 26th Mar 14 at 5:57 PM
    We have an issue with a 10 year fix we took out in 2006, on 2 fronts.
    We have been in touch with the Woolwich and the FSA (now FOS ).

    When we took out our 10 year fix with the Woolwich we were obviously unaware, and would not expect, that the banks had been involved in a sub-prime lending ticking bomb which would affect future interest rates for the next decade. Our decision to take out the mortgage

    At the time, 23rd august 2006, and I still have the documentation to prove this, the Woolwich was offering a better rate for a ten year fix than a 3 year fix and 5 year fix and better than their variable rate at the time.
    How often will you see one lender offer a 10 year fix interest rate lower than their 3year or 5year fix.

    Our issues are:-

    A. It has always seemed unfair that we have suffered by paying a higher rate and the banks have benefited as a result of their bad financial practices.
    B. Did they know this was about to happen and where therefore offering lower rates to entice as many people in before the event.

    Wikipedia states that the banks became aware of the sub-prime bomb in the summer of 2006.

    Do people think Woolwich knew and is it fair they have gained from the banking bad practise they were part of.
    This may refer to other lending institutes.
    Last edited by jonesoswestry; 27-03-2014 at 11:01 AM. Reason: pedantic reply
Page 3
  • jonesoswestry
    I have read every post in this thread and I still fail to see your point.
    Originally posted by zizouzidane11
    That only tells me more of you than
    me
  • jonesoswestry
    A total lack of understanding of how mortgages are financed. Along with a linking of totally unrelated issues.

    I would comment further but I'm beginning to feel like a broken record.

    The common theme these days is the lack of personal responsibility for peoples own decisions.
    Originally posted by Thrugelmir
    A comment at all would be a start. I don't know why you feel like a broken record as you haven't said anything except your patronising drivel at the bottom of the thread.
    All issues linked are related to finance
    The common theme these days is that consumers are getting ripped off everywhere and every day we hear of different ways finance or gas/electric companies have come up with fleecing us.
    If you had the knowledge to come up wit an argument I may be able to reply but yet you have not,
    I have never claimed on PPI, I have never put in a false claim for an accident and I have never complained about previous fixed rates.
    If you want to debate speak up or shut up?????
    • pjread
    • By pjread 28th Mar 14, 8:21 AM
    • 899 Posts
    • 374 Thanks
    pjread
    I am totally capable of working out whether it would be cheaper or not at 6% fees it is not.
    Originally posted by jonesoswestry
    Depends, 6% penalty in year 2 would mean 8 years of potentially for argument's sake a 2% lower rate? no idea on your LTV or rates at the time, or when you believe this somehow became the 'wrong' product for you (surely not day 1?) but there are scenario's with a long fix where I could see myself considering paying that.

    That said I doubt there's been a much better rate on a ten year fix at any point, so you wouldn't have had the certainty. You got *exactly* what you signed up to, and I really don't think you could have done much better with the best luck in the world, assuming you wanted a long fix!
    Last edited by pjread; 28-03-2014 at 8:24 AM.
    • tom9980
    • By tom9980 28th Mar 14, 8:27 AM
    • 1,579 Posts
    • 4,366 Thanks
    tom9980
    OP you have no complaint, you just don't seem to understand that. You got what you asked.
    "there are now at least 176 rules and regulations relating to letting a property, so my advice is learn learn learn" Paul Shamplina
  • jonesoswestry
    Depends, 6% penalty in year 2 would mean 8 years of potentially for argument's sake a 2% lower rate? no idea on your LTV or rates at the time, or when you believe this somehow became the 'wrong' product for you (surely not day 1?) but there are scenario's with a long fix where I could see myself considering paying that.

    That said I doubt there's been a much better rate on a ten year fix at any point, so you wouldn't have had the certainty. You got *exactly* what you signed up to, and I really don't think you could have done much better with the best luck in the world, assuming you wanted a long fix!
    Originally posted by pjread
    Every year I sit down and do the maths on how much it would cost on what is available against what I am currently paying with fees etc. It has never been cheaper.
    Our LTV would currently be about 10% and this is down to us always looking around and not the banks. We have got where we are in spite of them.
    Obviously 3 years ago we would only have needed a 5 year fix, as we were halfway through the 10 year term and less than 2% fix was available but it was still not worth us paying the exit fees.
  • jonesoswestry
    OP you have no complaint, you just don't seem to understand that. You got what you asked.
    Originally posted by tom9980
    Thanks for the in depth view
    • 007stuart
    • By 007stuart 28th Mar 14, 9:05 AM
    • 44 Posts
    • 63 Thanks
    007stuart
    Thanks for reply.

    We had come to the end of a deal with Nationwide and were moving property from a house we had just extended.
    We were getting a bigger property but were downsizing our mortgage as we had done up a house in a lovely rural spot.

    We were not advised we looked around all comparison and finance section compares and came to the conclusion this was by far the best deal for what we were looking to do and we paid a fee for the deal.

    We still maintain this was a good deal under the circumstances we were aware existed. I still fail to see why people think this odd.

    I have no complaints on the staff we dealt with in Barclays whatsoever.
    If there was any underhand business (and I haven't stated anywhere I think there was) it would be higher up the chain.

    It is about principal as to why I make the complaint. Everyone's circumstances are different.
    Originally posted by jonesoswestry

    Of course you can complain, that is your right, yet having read through your posts it seems that all you're complaining about is the fact that the banks may or may not have known of an impending banking crisis.


    I fear that you will only succeed in failing in your complaint that Woolwich Barclays knew what was going on as early as 2006 as:


    1. It was in 2008 the UK Banking crisis took place.

    2. The Treasury was approached in 2007 by Northern Rock as "lender of last resort" because NR was unable to obtain further lines credit to continue trading.

    3. Interest rates dropped from 2008 as the UK government was determined to avoid a recession akin that of the 1920's pale into insignificance.

    4. I sat through various industry presentations given by a Woolwich Director involved in mortgages in 2007 predicting interest rates were to rise.


    Financial markets are very volatile and whilst it is said a week in politics is a long time, a day in finance is an eternity!
    • pjread
    • By pjread 28th Mar 14, 9:23 AM
    • 899 Posts
    • 374 Thanks
    pjread
    Every year I sit down and do the maths on how much it would cost on what is available against what I am currently paying with fees etc. It has never been cheaper.
    Our LTV would currently be about 10% and this is down to us always looking around and not the banks. We have got where we are in spite of them.
    Obviously 3 years ago we would only have needed a 5 year fix, as we were halfway through the 10 year term and less than 2% fix was available but it was still not worth us paying the exit fees.
    Originally posted by jonesoswestry
    So
    *you're on 4.98%
    *you say you could have got 5yrs at under 2% 3yrs ago, so lets say 2% to be 'pessimistic'. I'll assume no fees which might offset the 'under 2%' you state.
    * Lets assume you owe 100k at that point, it doesn't really matter as it's about percentages...

    £100k at 4.98% over 5yrs = £113,172 total
    £100k plus 6% penalty = £106k. At 2% over 5 yrs = £111,477
    Saving from paying exit = £1,695

    Not huge but a definite saving unless "under 2%" means 1.99% with a £2k fee.
    • AndyT678
    • By AndyT678 28th Mar 14, 9:55 AM
    • 736 Posts
    • 1,008 Thanks
    AndyT678
    Our issues are:-

    A. It has always seemed unfair that we have suffered by paying a higher rate and the banks have benefited as a result of their bad financial practices.
    B. Did they know this was about to happen and where therefore offering lower rates to entice as many people in before the event.

    Wikipedia states that the banks became aware of the sub-prime bomb in the summer of 2006.

    Do people think Woolwich knew and is it fair they have gained from the banking bad practise they were part of.
    This may refer to other lending institutes.
    Originally posted by jonesoswestry
    So to paraphrase...
    1. You believe that the management of Woolwich BS knew of the impending global financial crisis in Aug 2006.
    2. The management of Woolwich BS also knew for certain that this would result in a period of record low intrest rates starting 3 years later in 2009.
    3. Because of this the Woolwich BS were both
      1. A - Charging you a higher rate than they could have done based on their knowledge that BoE rate would be at record lows in 3 years time. AND
      2. B - Offering artificially low rates to "entice people in."
    4. As a result they have made a grossly inflated profit from this loan.
    Is that a fair summary? If not why not?

    Do you understand how ludicrous it sounds to an objective reader?
  • jonesoswestry
    So to paraphrase...
    1. You believe that the management of Woolwich BS knew of the impending global financial crisis in Aug 2006.
    2. The management of Woolwich BS also knew for certain that this would result in a period of record low intrest rates starting 3 years later in 2009.
    3. Because of this the Woolwich BS were both
      1. A - Charging you a higher rate than they could have done based on their knowledge that BoE rate would be at record lows in 3 years time. AND
      2. B - Offering artificially low rates to "entice people in."
    4. As a result they have made a grossly inflated profit from this loan.
    Is that a fair summary? If not why not?

    Do you understand how ludicrous it sounds to an objective reader?
    Originally posted by AndyT678
    My post is on 2 fronts and the 2nd was that even if they didn't know the results were still the same.
    I've been paying more than what has been available due to bad banking practices.
    • Thrugelmir
    • By Thrugelmir 28th Mar 14, 10:40 AM
    • 66,332 Posts
    • 58,387 Thanks
    Thrugelmir
    If you want to debate speak up or shut up?????
    Originally posted by jonesoswestry
    Ok. Let's simplify your point to the real crux of the matter.

    To fund your 10 year fix term mortgage the lender will have obtained a tranche of funds also for 10 years. The lender would not have funded your mortgage with variable rate funds. The reason for this is the very low margin made on mortgage lending. Lenders fix their profit margins. Not sound practice to lend fixed money against risk variable interest rates. By fixing both sides a lender locks in their profit for the duration of the term.

    At the time you obtained your mortgage, the margin would have been well under 1% gross. This is before the bank covered operational overheads, taxation, regulatory fees, profit and shareholders dividends.

    To cover themselves against either actual loss or loss of profit if the borrowing party wishes to exit the contract early. Then the lender impose ERC's. These are clearly stated at the outset and are contractual terms. So responsibility has to lie with the borrower when applying for and accepting these terms.

    There's no grounds to complain now because of subsequent events.

    Shall I shut up now? Though happy to clarify anything I've written.
    “Risk comes from not knowing what you are doing. – Warren Buffett”
    • JimmyTheWig
    • By JimmyTheWig 28th Mar 14, 10:51 AM
    • 11,915 Posts
    • 11,433 Thanks
    JimmyTheWig
    I've been paying more than what has been available due to bad banking practices.
    Originally posted by jonesoswestry
    I disagree.
    I'd say that what has been available is less than what you've been paying due to bad banking practices.

    I.e. had the bankers not been naughty then we wouldn't have seen an unprecidentedly long period of unprecidentedly low rates.
    • AndyT678
    • By AndyT678 28th Mar 14, 10:55 AM
    • 736 Posts
    • 1,008 Thanks
    AndyT678
    My post is on 2 fronts and the 2nd was that even if they didn't know the results were still the same.
    Originally posted by jonesoswestry
    Yes. The lender made the profit that they expected to based on their own cost of money. Money that they would have obtained at a fixed rate themselves as other posters have already pointed out.

    I've been paying more than what has been available due to bad banking practices.
    Originally posted by jonesoswestry
    No. You've been paying more than what has been available due to your own choice to have long term security over your mortgage payments. That's the downside of opting for a fixed rate.
  • jonesoswestry
    I disagree.
    I'd say that what has been available is less than what you've been paying due to bad banking practices.

    I.e. had the bankers not been naughty then we wouldn't have seen an unprecidentedly long period of unprecidentedly low rates.
    Originally posted by JimmyTheWig
    Not sure if that argument isn't precisely what I'm saying?????
  • jonesoswestry
    Yes. The lender made the profit that they expected to based on their own cost of money. Money that they would have obtained at a fixed rate themselves as other posters have already pointed out.



    No. You've been paying more than what has been available due to your own choice to have long term security over your mortgage payments. That's the downside of opting for a fixed rate.
    Originally posted by AndyT678
    I don't argue as to how it was funded and never have despite what everyone posts. That isn't relevant for me.
  • jonesoswestry
    So
    *you're on 4.98%
    *you say you could have got 5yrs at under 2% 3yrs ago, so lets say 2% to be 'pessimistic'. I'll assume no fees which might offset the 'under 2%' you state.
    * Lets assume you owe 100k at that point, it doesn't really matter as it's about percentages...

    £100k at 4.98% over 5yrs = £113,172 total
    £100k plus 6% penalty = £106k. At 2% over 5 yrs = £111,477
    Saving from paying exit = £1,695

    Not huge but a definite saving unless "under 2%" means 1.99% with a £2k fee.
    Originally posted by pjread
    add to this calculation the setting up fees, mortgage completion fees (we have £250 on this and presumably on the next), solicitor fees valuation fees etc, I might be able to buy a bag of chips.
    • JimmyTheWig
    • By JimmyTheWig 28th Mar 14, 11:21 AM
    • 11,915 Posts
    • 11,433 Thanks
    JimmyTheWig
    Not sure if that argument isn't precisely what I'm saying?????
    Originally posted by jonesoswestry
    I understand why you may think that, but it's not quite the same.

    When someone does something wrong all we can look at is what would have happened if they didn't do it. We can't look at what would have happened if you had known they were going to do it.

    E.g. David Beckham crashes into your car.
    What happens is that he, or his insurance company, pays to fix your car and any other associated damages. Once your car is fixed, and you haven't had to pay for it, it's as though the accident didn't happen.
    What doesn't happen is you say "if I'd have known this was going to happen I would have brought my autograph book, thus completing my collection of signatures of the Class of '92 and I'd be sitting on something really valuable. Therefore I'm entitled to that signature."

    Had you had known that they were going to do these bad practices, and had you had known that these bad practices would lead to such low rates for such a long time, then you could have been better off today. But you didn't know that and there is nothing to say that you should have known that.
    Had they not sone these bad practices then you would have the same rate as you do now. You'd have a smug feeling that you made the right choice because rates didn't come down, but you'd still be paying the same as you are now.

    I guess, then, you can sue the bank because they denied you a smug feeling by carrying out these bad practices. I'm not sure that the court will put a monetery value on a smug feeling, though, so it might not be worth it.
    • 007stuart
    • By 007stuart 28th Mar 14, 11:27 AM
    • 44 Posts
    • 63 Thanks
    007stuart
    Not sure if that argument isn't precisely what I'm saying?????
    Originally posted by jonesoswestry

    No its not!


    You made the decision to take a 10 year fix. You did the subsequent calculations to prove it was not cost efficient to move so this has been the ideal deal for you when you took it out.


    Woolwich Barclays have made exactly the same return on your mortgage since you took out your mortgage with them as they too have been stuck with a 10 year fixed term bond that no one in their right mind will buy from them given interest rates have plummeted post 2008.


    Where do you think this is unfair, perhaps this is because you really don't have such a grasp of the mechanics of the financial system as you think you do.


    Man up, get over it and stop whining.
  • jonesoswestry
    No its not!


    You made the decision to take a 10 year fix. You did the subsequent calculations to prove it was not cost efficient to move so this has been the ideal deal for you when you took it out.


    Woolwich Barclays have made exactly the same return on your mortgage since you took out your mortgage with them as they too have been stuck with a 10 year fixed term bond that no one in their right mind will buy from them given interest rates have plummeted post 2008.


    Where do you think this is unfair, perhaps this is because you really don't have such a grasp of the mechanics of the financial system as you think you do.


    Man up, get over it and stop whining.
    Originally posted by 007stuart
    what some dunderheads fail to spot is that is not worth me leaving due to the 6% leaving fee not because the mortgage percentages

    And Woolwich's 'bond' has no concern for me as I have already stated????
  • jonesoswestry
    I understand why you may think that, but it's not quite the same.

    When someone does something wrong all we can look at is what would have happened if they didn't do it. We can't look at what would have happened if you had known they were going to do it.

    E.g. David Beckham crashes into your car.
    What happens is that he, or his insurance company, pays to fix your car and any other associated damages. Once your car is fixed, and you haven't had to pay for it, it's as though the accident didn't happen.
    What doesn't happen is you say "if I'd have known this was going to happen I would have brought my autograph book, thus completing my collection of signatures of the Class of '92 and I'd be sitting on something really valuable. Therefore I'm entitled to that signature."

    Had you had known that they were going to do these bad practices, and had you had known that these bad practices would lead to such low rates for such a long time, then you could have been better off today. But you didn't know that and there is nothing to say that you should have known that.
    Had they not sone these bad practices then you would have the same rate as you do now. You'd have a smug feeling that you made the right choice because rates didn't come down, but you'd still be paying the same as you are now.

    I guess, then, you can sue the bank because they denied you a smug feeling by carrying out these bad practices. I'm not sure that the court will put a monetery value on a smug feeling, though, so it might not be worth it.
    Originally posted by JimmyTheWig
    Not a Man u fan.

    Ill give you an analogy:-

    What if I put a bet on a horse race and the bookmaker then runs out in front of the horse and stops it from winning.
    He has therefore affected my chances of being on a winning horse and pocketed the money in the process???
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