RBS Current Account Mortgage

[veryweary]

Excuse my lack of knowledge, but can anyone answer this.
Had CA mortgage for about 10 years, interest rate I was told when I took it out was variable, it went up and down depending on base rate.
Last month got letter saying altho Bof E had dropped rates, they weren't reducing rates. Now this month got another letter saying they're increasing them by 0.25% from July and the rise reflects a change in market conditions.

Just looked at 'standard conditions' and it says 'The initial interest rate is stated in offer.We can change it at any time' Does this mean they can change it to whatever they want, when they want?
Wondering if this leaves me wide open as RBS try to claw back their recent losses in the US housing fiasco.

Prefer to ask on here, as I feel more confident that the info I get will be correct.

[manchester1]

Very Weary, Sorry to say but if it is a lender variable rate , then they can decide when and how much they will increase it . Why dont you ask them if they have any diffferant products that you can transfer to ,which might suit you better.
Manc1

[MortgageTalk]

Unfortunately, you are getting base tracker and a lender's standard variable rate (SVR) confused. The base tracker will track changes in the Bank of England base rate, but a lender can make changes 'as they see fit' to their SVR. Please note changes to a SVR will also affect a discounted interest rate scheme, as the discount is always based on the SVR. Talk to a good independent mortgage broker to discuss your options, as after this time you should have no mortgage redemption penalty, only an administration exit fee. Hope this helps.

[veryweary]

Thanks Man1 and Mortgagetalk for explanations. Just goes to show you can pay a mortgage for years and not understand what you've signed up for.:o.

Does this mean that other than competetive mortgage market conditions, there's nothing to stop rates rising to whatever % the banks need to shore up losses. Can remember the 15% rates and it was a very hard time. Isn't it wonderful that when the banks mess up their finances by being greedy, the consumer gets the bill again

I'll take your advice and have a look round at what's on offer
thanks

[MortgageTalk]

You are getting there! A SVR or discounted mortgage scheme is controlled by the lender raising or lowering their SVR. A base tracker can only be altered by the Bank of England Monetary Committee (that meets monthly) raising or lowering the BOE Base Rate. As a broker on a 'like for like' basis, I would in the majority of cases recommend a base tracker scheme over a SVR or discounted scheme, as changes with the bank base rate reflects the true underlying econimic situation rather than a lender changing their SVR purely for their own commercial advantage. Hope this helps.

MortgageTalk