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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 5
  • zizouzidane11
    That only tells me more of you than
    me
    Originally posted by jonesoswestry
    If you say so. Please tell me how you come to this conclusion? and how much do you know about me after one sentence of disagreement with your thought process on the matter!

    If you succeed in your complaint, then please share. My bank have also been implicated in the credit crunch saga and I may have a few cases against them then:
    - Very low interest rates on my savings, my savings were doing much better before.
    - Credit crunch meant my pay rises have failed to keep up with inflation and hence lower quality of life.
    And many other issues other people have encountered I'm sure. Listen, we, as a collective, all have grievances and feel an injustice with the way some in the financial world have acted, and how their wrongdoings brought the whole system to almost collapse, and hence pain and suffering to many. But I genuinely feel that your argument if flawed and that you are comparing apples and oranges.
    Good luck to you anyway.
    • kingstreet
    • By kingstreet 28th Mar 14, 3:27 PM
    • 35,776 Posts
    • 19,582 Thanks
    kingstreet
    Unless I've missed something over the past four, admittedly very interesting, pages
    Originally posted by Mortgage_Mark
    Can I recommend you go into user settings and choose the 40 posts per page option?
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • AndyT678
    • By AndyT678 28th Mar 14, 3:28 PM
    • 736 Posts
    • 1,008 Thanks
    AndyT678
    Back in the room, I nearly missed your thread.

    You analogy fails to see this would be an act of god and not an act incompetence.
    Originally posted by jonesoswestry
    But suppose this God person has been instructed to maintain nothing but clement weather during the period then it can only be incompence or mailice.

    Do you now insist that the bookie allows you to change your bet?
  • jonesoswestry
    What? So if you were offered odds of 100/1 on a roll of a fair die landing on 6 you wouldn't take it? [Or, at least, no more likely to take it than if the odds were 2/1?]
    Originally posted by JimmyTheWig
    I wouldn't let 100/1 make me believe it had more chance than the numbers
  • jonesoswestry
    If you say so. Please tell me how you come to this conclusion? and how much do you know about me after one sentence of disagreement with your thought process on the matter!

    If you succeed in your complaint, then please share. My bank have also been implicated in the credit crunch saga and I may have a few cases against them then:
    - Very low interest rates on my savings, my savings were doing much better before.
    - Credit crunch meant my pay rises have failed to keep up with inflation and hence lower quality of life.
    And many other issues other people have encountered I'm sure. Listen, we, as a collective, all have grievances and feel an injustice with the way some in the financial world have acted, and how their wrongdoings brought the whole system to almost collapse, and hence pain and suffering to many. But I genuinely feel that your argument if flawed and that you are comparing apples and oranges.
    Good luck to you anyway.
    Originally posted by zizouzidane11
    Thank you for a fair summary the only difference with the poor savings rates available is that you have other options available and are not tied in.
    All the other things you add are true??
    If you'd have said this in your orig OP I would have known your thoughts
    • JimmyTheWig
    • By JimmyTheWig 28th Mar 14, 4:26 PM
    • 11,920 Posts
    • 11,441 Thanks
    JimmyTheWig
    I wouldn't let 100/1 make me believe it had more chance than the numbers
    Originally posted by jonesoswestry
    Doesn't make it any more likely.
    But it does make it worth betting on.
  • jonesoswestry
    But suppose this God person has been instructed to maintain nothing but clement weather during the period then it can only be incompence or mailice.

    Do you now insist that the bookie allows you to change your bet?
    Originally posted by AndyT678
    Incompetence I would say if I was a religious man.

    If the bookie had stopped my horse and therefore created a situation I could no have foreseen then absolutely YES.
    If not then at least a free bet and no penalty to make it.
    Last edited by jonesoswestry; 28-03-2014 at 4:30 PM.
  • jonesoswestry
    Doesn't make it any more likely.
    But it does make it worth betting on.
    Originally posted by JimmyTheWig
    From experience I would have to check the dice wasn't loaded
  • donttrustfinancialadvisor
    your 110% correct as the mortgage adviser once said
    i have read through all the threads you have explained and I can 100% see where you are coming from.
    I dont know that the Woolwich would have been aware of what was about to happen but I find a 3 year fix on higher than a 10 year fix very strange. Why do people think they cant predict if that is exactly what they did manage to do.
    You were correct to have issue with broken record fool as he had only posted one thread.
    I could be wrong but I was fairly sure that we had our endowment set up by a mortgage adviser who obtained commission but nobody else has jumped to tin foil hat mans aid on this this.
    The fact that the majority of the people who have stated there opinion are the very people who have been at the centre of this farce should not deter you from your complaint.
    You are right the majority of these so called experts deserve rude comments as they are quite happy to issue them.
  • jonesoswestry
    i have read through all the threads you have explained and I can 100% see where you are coming from.
    I dont know that the Woolwich would have been aware of what was about to happen but I find a 3 year fix on higher than a 10 year fix very strange. Why do people think they cant predict if that is exactly what they did manage to do.
    You were correct to have issue with broken record fool as he had only posted one thread.
    I could be wrong but I was fairly sure that we had our endowment set up by a mortgage adviser who obtained commission but nobody else has jumped to tin foil hat mans aid on this this.
    The fact that the majority of the people who have stated there opinion are the very people who have been at the centre of this farce should not deter you from your complaint.
    You are right the majority of these so called experts deserve rude comments as they are quite happy to issue them.
    Originally posted by donttrustfinancialadvisor
    Thanks for the post but I expect you'll get the same level of abuse as I did off 'tinfoilhat' man but just as well broken record guy has left the building
  • donttrustfinancialadvisor
    Precisely. Plus, of course, he'd need to assume that the bookmaker knew that the rain was coming, but offered "teaser" odds on a horse that he knew would suffer in the wet.
    Originally posted by BillJones
    I wonder if this guvnor really works in the financial trade? Iguess he is rude enough to
    • dunstonh
    • By dunstonh 29th Mar 14, 12:53 AM
    • 98,579 Posts
    • 67,062 Thanks
    dunstonh
    I could be wrong but I was fairly sure that we had our endowment set up by a mortgage adviser who obtained commission but nobody else has jumped to tin foil hat mans aid on this this.
    yes, you are wrong for the reasons already given. Mortgage advisers are not investment advisers. Endowments were investment products and could not be put in place by mortgage advisers. Many of the banks/building society reps would use a mortgage adviser for the mortgage but introduce to an investment adviser for the endowment. Some investment advisers also did mortgages.

    The fact that the majority of the people who have stated there opinion are the very people who have been at the centre of this farce should not deter you from your complaint.
    There is no one on this thread who is part of the issue. There are plenty on this thread that dont have anything to do with financial services that think the reason for complaint is farcical.
    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.
    • PeacefulWaters
    • By PeacefulWaters 29th Mar 14, 6:09 AM
    • 8,316 Posts
    • 10,685 Thanks
    PeacefulWaters
    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 ).
    Originally posted by jonesoswestry
    The old FSA didn't handle complaints. That has been the remit of the FOS since before you took out your mortgage. How did your correspondence with the FSA end?

    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
    I don't think the banks were aware of what was to come either. If they were it compounds their stupidity several times over.

    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.
    More than possible. Demand for ten year fixes tends to be weaker than that for shorter term fixes. Longer term swap rates can be lower. Product fees and ERCs can be higher, subsidising a lower rate too.

    How often will you see one lender offer a 10 year fix interest rate lower than their 3year or 5year fix.
    Sometimes. While it might not be the norm it certainly can and does happen.

    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.
    It might seem unfair. But if a saver had opened a high fixed rate account at the same time I don't think it would be unfair on the bank having to honour it. In your case they raised long term fixed rate funds on the money markets and lent on to you. While doubtless they charge you more than they pay the rate they pay will remain fixed throughout. So in terms of your mortgage they have made no additional gain from falling interest rates.

    B. Did they know this was about to happen and where therefore offering lower rates to entice as many people in before the event.
    If they had anticipated the Credit a Crunch having anything like the significance it did they'd have reduced their lending to tiny proportions and widened their margins on any lending that did happen.

    Wikipedia states that the banks became aware of the sub-prime bomb in the summer of 2006.
    You can be aware of a problem but if you don't understand the size of that problem then you won't always manage it effectively.

    Do people think Woolwich knew and is it fair they have gained from the banking bad practise they were part of.
    They haven't gained. Their margin on your mortgage remains the same.

    We took out a ten year fix in 2006 because it would see us to the end of the mortgage on our home and we would be loan free at the end.
    A suitable mortgage product for your requirements then.

    That is how we are in the position where we have nearly paid for our house and never missed a payment, even though we were badly let down at the start (when we were green) by overpaid mortgage advisers telling us that endowments were the way to go, we all know that one.
    In 2006? Really?

    We were happy in the knowledge that if the interest rates dropped we would be paying more (this doesn't mean we wished this to happen) because as dunstonh correctly pointed out it gave us the security we were looking for.
    For clarity then, you believe your bought an appropriate mortgage.

    None of these comments, however, answer my original post.
    Really? Have you read them?

    Additional information
    In the Daily Mail on 24th January 2014 Mark Carney refers to the fact that prior to the crisis (when we made our decision) the interest rates were averaging 5%.
    So a 4.98% fix for 10 years was a perfectly sensible choice, especially as a 2 year fix and 5 year fix were 5.49%. and the SVR was 6.59%.... (I do apologise for not taking into consideration that Barclays Bank/Woolwich had been complicit in buying up bonds that included sub-prime loans)

    Since March 2009 the interest rate has been 0.5% (I know this is not the rate available before you tell me).

    Conclusion
    We have paid a higher rate than what has been available for the past 5 years (correct)
    The Banks have benefited from the disaster they created. (correct)

    In reply to dunstonh ‘Would you be saying the same if rates had risen and the bank thought it unfair that you were better off.’.... Look at the 6,700 borrowers who had West Bromwich B.S tracker mortgages that tracked the 0.5% base rate and then comment.

    So it’s OK for the banks to have their Bollinger and drink it.
    You appear to have sidetracked into rant mode. None of this will help you win at the FOS. You might not like banks and that's a view that you're entitled to.

    But you wanted a long term fix. It met your objectives at the time. Rates of similar long term fixes are much the same today as they were in 2006.

    Banks try to make a profit when they lend money. It's why they exist. The FOS are not interested in the margins. (but I will repeat that these margins remain the same for the term of your fix) but they may get interested in suitability of sale if you were advised. You've already agreed it was a suitable product.

    So when you cut out the side show you bought the right product at the time. It met your needs and gave you certainty. The lender has stuck to the terms and conditions. What are you complaining about?
    Last edited by PeacefulWaters; 29-03-2014 at 6:25 AM.
    • 007stuart
    • By 007stuart 29th Mar 14, 8:09 AM
    • 44 Posts
    • 63 Thanks
    007stuart
    The old FSA didn't handle complaints. That has been the remit of the FOS since before you took out your mortgage. How did your correspondence with the FSA end?

    I don't think the banks were aware of what was to come either. If they were it compounds their stupidity several times over.

    More than possible. Demand for ten year fixes tends to be weaker than that for shorter term fixes. Longer term swap rates can be lower. Product fees and ERCs can be higher, subsidising a lower rate too.

    Sometimes. While it might not be the norm it certainly can and does happen.

    It might seem unfair. But if a saver had opened a high fixed rate account at the same time I don't think it would be unfair on the bank having to honour it. In your case they raised long term fixed rate funds on the money markets and lent on to you. While doubtless they charge you more than they pay the rate they pay will remain fixed throughout. So in terms of your mortgage they have made no additional gain from falling interest rates.

    If they had anticipated the Credit a Crunch having anything like the significance it did they'd have reduced their lending to tiny proportions and widened their margins on any lending that did happen.

    You can be aware of a problem but if you don't understand the size of that problem then you won't always manage it effectively.

    They haven't gained. Their margin on your mortgage remains the same.

    A suitable mortgage product for your requirements then.

    In 2006? Really?

    For clarity then, you believe your bought an appropriate mortgage.

    Really? Have you read them?

    You appear to have sidetracked into rant mode. None of this will help you win at the FOS. You might not like banks and that's a view that you're entitled to.

    But you wanted a long term fix. It met your objectives at the time. Rates of similar long term fixes are much the same today as they were in 2006.

    Banks try to make a profit when they lend money. It's why they exist. The FOS are not interested in the margins. (but I will repeat that these margins remain the same for the term of your fix) but they may get interested in suitability of sale if you were advised. You've already agreed it was a suitable product.

    So when you cut out the side show you bought the right product at the time. It met your needs and gave you certainty. The lender has stuck to the terms and conditions. What are you complaining about?
    Originally posted by PeacefulWaters

    Perfect response, yet I doubt you will get any thanks as it doesn't fit with the OP's fantasy.
  • jonesoswestry
    The old FSA didn't handle complaints. That has been the remit of the FOS since before you took out your mortgage. How did your correspondence with the FSA end?

    I don't think the banks were aware of what was to come either. If they were it compounds their stupidity several times over.

    More than possible. Demand for ten year fixes tends to be weaker than that for shorter term fixes. Longer term swap rates can be lower. Product fees and ERCs can be higher, subsidising a lower rate too.

    Sometimes. While it might not be the norm it certainly can and does happen.

    It might seem unfair. But if a saver had opened a high fixed rate account at the same time I don't think it would be unfair on the bank having to honour it. In your case they raised long term fixed rate funds on the money markets and lent on to you. While doubtless they charge you more than they pay the rate they pay will remain fixed throughout. So in terms of your mortgage they have made no additional gain from falling interest rates.

    If they had anticipated the Credit a Crunch having anything like the significance it did they'd have reduced their lending to tiny proportions and widened their margins on any lending that did happen.

    You can be aware of a problem but if you don't understand the size of that problem then you won't always manage it effectively.

    They haven't gained. Their margin on your mortgage remains the same.

    A suitable mortgage product for your requirements then.

    In 2006? Really?

    For clarity then, you believe your bought an appropriate mortgage.

    Really? Have you read them?

    You appear to have sidetracked into rant mode. None of this will help you win at the FOS. You might not like banks and that's a view that you're entitled to.

    But you wanted a long term fix. It met your objectives at the time. Rates of similar long term fixes are much the same today as they were in 2006.

    Banks try to make a profit when they lend money. It's why they exist. The FOS are not interested in the margins. (but I will repeat that these margins remain the same for the term of your fix) but they may get interested in suitability of sale if you were advised. You've already agreed it was a suitable product.

    So when you cut out the side show you bought the right product at the time. It met your needs and gave you certainty. The lender has stuck to the terms and conditions. What are you complaining about?
    Originally posted by PeacefulWaters

    Despite what Bond says (and he is still making snide little comments and wonders why he gets snide replies) I have replied to all threads with the level of sarcasm they were delivered.

    Thanks for a lengthy unpatronising response. Had others replied in the same way then no 'rant' or sarcasm would be necessary.

    In reply to how did your correspondence with the FSA end?
    FSA? surprised you brought this up in this way though as it would appear to beneath the rest of the thread. I corrected it to the FOS and this was a simple error that appears to give others some feeling of superiority, even though the same person told me FOS would not be dealing with, it when they are, and he brought forward information to back it up?
    They are still looking at it, my letter was sent on the 14th January and hasn't been thrown out at any stage yet.

    You don't think the banks were aware either.
    This seems to be the same as me I don't know either but many things happen we were not aware of.

    10 year fixes I still don't recall any other banks anywhere having lower 10 year fix than their 5 or 3. Unless someone can come up with proof of this it remains the same.

    I hold my hands up to the fact that they may not have made additional gains and did so in an earlier thread.
    As for the savers on a higher fixed rate account, they would have to honour this. Rightly so but this still goes back to what I have already stated. They created the issues.

    Most of the next few paragraphs appear to be along the lines of the did they know category, and if they didn't (which I have always stated I don't know either) then (as stated before) my second part kicks in how could I foresee it?

    Again as stated before I was happy with the mortgage prior to finding out about what the banks had been up to.

    I don't understand why you have an issue with the mortgage in 2006 seeing us to the end. This was our 4th fixed rate mortgage (as already stated) and when we finish it in 30 months time we will have done so in less than the the normal 25 years despite the bad start we had due to endowments.
    Our endowment was purchased about 1993.

    Again correct mortgage for how we believed the banks would be going about their business at the time.

    I had read them all 4 at that stage and thought it was a good time give additional information to save going over the same things over and over, completely got that one wrong.

    Your summary is 100% correct and clarifies what happens the only thing missing is mentioning that the banks moved away from many of the usual practices into ones that would prove disastrous for many many people. I don't place myself in that bracket however.

    Banks try to make a profit when they lend money. It's why they exist. Its a shame they forgot about this
    Last edited by jonesoswestry; 29-03-2014 at 10:25 AM.
    • dunstonh
    • By dunstonh 29th Mar 14, 11:46 AM
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    dunstonh
    I corrected it to the FOS and this was a simple error that appears to give others some feeling of superiority, even though the same person told me FOS would not be dealing with, it when they are, and he brought forward information to back it up?
    The FOS will not rule on commercial issues. e.g. they wont deal with a complaint about the rate issued. The examples I posted were not commercial issues, although one came close.
    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.
  • jonesoswestry
    The FOS will not rule on commercial issues. e.g. they wont deal with a complaint about the rate issued. The examples I posted were not commercial issues, although one came close.

    taking away from the fact that you disagree with me which body should I have been making my complain to?
    • dunstonh
    • By dunstonh 29th Mar 14, 1:34 PM
    • 98,579 Posts
    • 67,062 Thanks
    dunstonh
    taking away from the fact that you disagree with me which body should I have been making my complain to?
    Yes. You initially said the food standards agency.
    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.
  • jonesoswestry
    Yes. You initially said the food standards agency.
    Originally posted by dunstonh
    Should have known better than to expect anything different from someone who has to wear mittens instead of gloves.
  • donttrustfinancialadvisor
    Should have known better than to expect anything different from someone who has to wear mittens instead of gloves.
    Originally posted by jonesoswestry
    Took me a while to work that one out but I got there in the end
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