fixed mortgages should banks gain from their sub-prime fiasco

jonesoswestry · 27 March 2014 at 4:38PM

Prothet_of_Doom wrote: »

I took a ten year fixed rate out at 4.6% in 2004, knowing that the interest rate might go up, and it might go down, and that if it went down, I'd be paying more than people who did not take a fixed rate, and vice versa.
Isn't that the point ?

Exactly the point and that's why I did the same and I took out 3 fixed mortgages prior to that and was always higher than the SVR.
I totally accept that and have never and will never complain about it.

I still see this scenario as different and therefore the abuse I have had about wanting my cake and throwing the toys out of the pram is untrue.

JimmyTheWig · 27 March 2014 at 4:41PM

jonesoswestry wrote: »

I say that is not relevant because it is just one scenario of many but you never stated whether you were in any agreement with me but came up with an option and a prediction I was better off as I was, which was wrong.

Yes it is just one scenario of many. But I feel that it is a likely scenario that you would have gone for if you had realised at the time that the 10 year fix wasn't what you'd wanted.
What do you think you would have gone for in hindsight?

Ok, so my guess was a little out. But a 5 year fix at 3.0% with fees less than £600 might not be likely. At 3.6% with no fees you'd be breaking even.

My point is that while it looks like you are on a really high rate, you haven't done that badly overall.

If your complaint is upheld then you will be put in the position that you would have been had you not been mis-sold to. That's why I think it is relevant to look at the difference in cost between what you got and what you wuold have had.

kingstreet · 27 March 2014 at 4:45PM

Surely, the question here is could the banks have foreseen the effects of the credit crunch?

It's quite possible that even if you saw it coming in August 2007, it would have seemed that a ten year fix was a splendid idea, as it was entirely possible that higher rates would follow, not lower rates.

That's exactly the kind of uncertainty that fixed rates of that duration are perfect to meet.

dunstonh · 27 March 2014 at 5:18PM

Coming back with the same response time and again is getting us nowhere, where did I say the mortgage advisor sold me my statement was
'overpaid mortgage advisers telling us that endowments were the way to go'
Unless you are misreading telling for selling.

I suggest you read it again as I never said you were sold an endowment. I said mortgage advisers could not sell endowments. So, why would they tell you that is best if they cant actually arrange it?

I can only tell you what happened when we went for advice on our mortgage in 1993. and I don't recall you being there.
We were advised that our best option was an endowment. This was based on the the same facts that everybody else who have had payouts for mis-selling was obviously told.
They arranged the endowment and they would have received the commission as we did not pay any money for this advice.
Again you still fail to tell me how else they get paid.

That person you saw would not be a mortgage adviser. Probably a tied FA at a bank or building society.

Do you believe that Martin Lewis is incorrect in his statement I gave you before?

I dont know what he says. However, a number of the articles on this site contain or have contained errors which have been corrected when pointed out. If he is saying mortgage advisers get paid for arranging investment contracts then that is wrong as it is not possible.

The FOS are already looking into the claim and may or may not agree, if it fell outside their remit they would have said at the start as I have discussed this over the phone.

The person on the phone taking details of your complaint will not be the person that decides that. Behind the scenes they will check with the lender to see if you have complained to them first. if not, they will just forward your complaint on. If you have, they will then put it in the queue for an adjudicator. Once the adjudicator looks at it, they will check if it is a complaint they can deal with or not.

jonesoswestry · 27 March 2014 at 5:42PM

JimmyTheWig wrote: »

Yes it is just one scenario of many. But I feel that it is a likely scenario that you would have gone for if you had realised at the time that the 10 year fix wasn't what you'd wanted.
What do you think you would have gone for in hindsight?

Ok, so my guess was a little out. But a 5 year fix at 3.0% with fees less than £600 might not be likely. At 3.6% with no fees you'd be breaking even.

My point is that while it looks like you are on a really high rate, you haven't done that badly overall.

If your complaint is upheld then you will be put in the position that you would have been had you not been mis-sold to. That's why I think it is relevant to look at the difference in cost between what you got and what you wuold have had.

If I'd have had hindsight the obvious answer would be a 2 or 3 year fix and and maybe a tracker but I fully accept this would never have happened and I have always had fixed.

At the risk of being shot down in flames I am aware that my 4.98% mortgage is still not a bad deal. That is not my issue.
I can't help but come back to my reel frustration of how the banks went about their business of no deposit, 110% mortgage buying of bonds with sub-prime mortgages without looking at what they involved, fixing libor rates, PPI etc
This is what caused the crisis.
Many people have benefited by the lower interest rates where as we, who have always been prudent, have not. Good luck to them.

It is like the PPI issues, I don't agree that everyone should get compensation. I took out loans and was told I could not have loans unless I took out PPI, so I went elsewhere.
That option was available to all.
I know of someone who had compensation less an amount they had been paid for a claim on the policy. Madness.
However if people did have it put on without knowing then that is wrong. I managed to go through life and never had it slipped in.

When we took out our mortgage (and rightly so) we had to pay deposit and indemnity insurance. We had the endowment worries (which we have had to work around) we had standard life endowment promises that were not worth anything in the end as they added provisos that kicked in.
All in all we have been totally shafted from start to finish.

I did work out a figure of £4000 to £4500 but it is difficult to come out with an exact figure as we have paid off lump sums at various stages.

As I said in other threads we'd had 3 fixed rates before and always paid higher and I fully accept this.

jonesoswestry · 27 March 2014 at 5:47PM

kingstreet wrote: »

Surely, the question here is could the banks have foreseen the effects of the credit crunch?

It's quite possible that even if you saw it coming in August 2007, it would have seemed that a ten year fix was a splendid idea, as it was entirely possible that higher rates would follow, not lower rates.

That's exactly the kind of uncertainty that fixed rates of that duration are perfect to meet.

Agreed on all points but we now know what did happen.

jonesoswestry · 27 March 2014 at 5:59PM

dunstonh wrote: »

Once the adjudicator looks at it, they will check if it is a complaint they can deal with or not.

They have checked and are dealing with it whether they agree or not they are therefore the correct body where you said they were not.

somethingcorporate · 27 March 2014 at 6:05PM

I think you are trying to connect two unconnected issues here.

1) The rate: Just using your logic, had the rates gone up to 10% would you be happy with the bank knocking on your door asking to increase your rate? You knew what you were signing up to and the fact an unpredicted series of events led to historically low rates you feel hard done by. This was the risk you took on with taking a fixed, had you wanted to benefit from low rates you should have taken a tracker.

2) The banks conduct: OK, you, me and the whole world abhor how the banks and bankers behaved and continue to behave and far too few punishments have been handed out. It's a fair shout and every tax payer has a right to feel aggrieved at how toothless the government and global community has been to blunt the impact of this wreckless bunch of fools we have at the helm of banks being paid millions for abject failure.

These two events are not connected. Feel angry with yourself for the first and the banks for the second but in no material way are they related.

jonesoswestry · 27 March 2014 at 6:26PM

somethingcorporate wrote: »

I think you are trying to connect two unconnected issues here.

1) The rate: Just using your logic, had the rates gone up to 10% would you be happy with the bank knocking on your door asking to increase your rate? You knew what you were signing up to and the fact an unpredicted series of events led to historically low rates you feel hard done by. This was the risk you took on with taking a fixed, had you wanted to benefit from low rates you should have taken a tracker.

2) The banks conduct: OK, you, me and the whole world abhor how the banks and bankers behaved and continue to behave and far too few punishments have been handed out. It's a fair shout and every tax payer has a right to feel aggrieved at how toothless the government and global community has been to blunt the impact of this wreckless bunch of fools we have at the helm of banks being paid millions for abject failure.

These two events are not connected. Feel angry with yourself for the first and the banks for the second but in no material way are they related.

I can't feel angry with myself as the unpredicted series of events was in fact a result of the banks, I could never have predicted they were buying up all the bad US mortgages.
I did know they were selling 110% mortgages and thought this was madness but would top of the madness list.

I list the other bank issues purely as a way of pointing out exactly what they have been up to that we now know of when people say I'm a conspiracy theorist. These things we now know, we would have said 25 years ago were highly unlikely if not impossible.

dunstonh · 27 March 2014 at 6:34PM

http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=30766

In June 2008 the Bank of England base rate had begun to fall from its peak of 5.75% a year earlier, and was now at 5%. I’m not persuaded HSBC could have known or predicted that the rate would fall to 0.5%, where it has remained for almost four years.

I do appreciate that if they’d stayed on the reversionary rate in 2008 Mr and Mrs G would now be paying only 1.5% interest rather than HSBC’s variable rate (currently 3.94%). But I’m satisfied that Mr and Mrs G were aware of the implications of staying on the Home Buyer Mortgage variable rate in 2008. I think it likely they took into consideration the possibility of upward movement in the Bank of England base rate when they opted for another fixed rate product.

My final decision is that I do not uphold this complaint
----

http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=15573

Mr B complains that the five year fixed rate product he was advised to take out is too expensive. He says that National Westminster Bank Plc (“NatWest”) should have ‘forecast’ what interest rates would be in the future, and have advised him accordingly.

I appreciate the points that Mr B has made and I agree that, with the benefit of hind-sight, a two year fixed rate followed by a tracker rate product may well have been cheaper.
However, just because a mortgage product is not the cheapest available, does not necessarily mean that the product recommended was unsuitable, or that a cheaper product should have been recommended. Likewise, I cannot reasonably agree that NatWest could have been expected to have predicted, with any accuracy, what would happen to interest rates.

My final decision is that I do not uphold this complaint

----
http://www.ombudsman-decisions.org.uk/viewPDF.aspx?FileID=18618

Mr D says that The Royal Bank of Scotland Plc charged excessive interest on a fixed rate mortgage he took out in 2007. The regulator found that RBS had been guilty of misconduct relating to its submission of rates which formed part of the process of setting the London Interbank Offered Rate, or “LIBOR”. Mr D says that this affected interest rates available in 2007, including his fixed rate
mortgage.

Our adjudicators did not recommend that the complaint should be upheld. The second adjudicator pointed out that the initial rate was fixed and the subsequent rate was not linked to LIBOR – it was for Mr D to decide whether to accept the loan on the terms offered by RBS or not.

In all of the circumstances, I don’t consider that the RBS’s actions have caused Mr D to suffer any loss. In any event, Mr D agreed to a fixed rate mortgage with RBS – I don’t consider it would be fair to treat him as if he had agreed a different rate.

My final decision is that I do not uphold this complaint.

fixed mortgages should banks gain from their sub-prime fiasco

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