Thread: Mortgage Interest rates inreased DUE TO MARKET FORCES

I today received a letter from my lender telling me that my interest rates are being increased by 0.75% due to 'market forces' What on earth does that mean? It's doesn't mention bank rates,or Bank of England rates or even Libor rates! Has anyone else had something like this?

At a time when we are struggling to pay any bills! the lenders are attempting to increase their profits just because it appears they can! surely if they can get away with this It could lead onto their demand for further increases unrelated to borrowing rates at a whim! I am furious that these banks can still continue to ride roughshod over the beleaguered public after all thats happened! If the banks are allowed to get away with this future & exsisting borrowers will be unable to budget for their payments & be continually stressed (as I currently Am) over what or when the next increases would be!!
It appears that the lenders have no further use for the Bank of England as they are moving into the area of 'Market Forces' breaking their link with the usual Interest rate determinations!
Where are the regulators when you need them??

Any thoughts anyone????????

Who's your lender?

Hi Zander thanks for responding
It was GMAC but they sold it on to Amber homeloans!

fos complaint?

Is there a reason you ask if its through a broker?

Hi to all thanks sooo much for your'e responses & concerns!
I have written to them asking for clarification of 'Market Forces'

Also I'm sooo sorry The lender is not Amber Hm/loans I'ts MAS number 5 they are part of Brittania group got confused they bought the mortgage from GMAC. According to the T&C's under GMAC the same terms apply to MAS 5!

In answer to your'e question, yes I did go via a broker who I gather is no longer trading!
It was originally a discounted rate till 2007, which then reverted to a Standard Variable rate! which I naively thought was linked to B of E rates as no-one ever bothered to explain otherwise!
To suddenly increase by another 0.75 due to 'Market Forces' seems ludicrous!
I suspect I'm not the only person this has happened to,what worries me is that this may become the norm with all lenders moving away from the usual reasons for interest rate rises to a 'free for all' amongst the banks

Sorry 42man if iv'e messed you around! don't give up on me though Pls

Hi again,
To clarify, no I didn't take out PPI cover as I never belived in them I'm too cynical. I thought I would give them a chance to explain themselves before I go to the fos!
It's fantastic to know that people on this site care & offer support it keeps our spirits up!

Originally Posted by Bincrunched

Hi to all thanks sooo much for your'e responses & concerns!
I have written to them asking for clarification of 'Market Forces'

Also I'm sooo sorry The lender is not Amber Hm/loans I'ts MAS number 5 they are part of Brittania group got confused they bought the mortgage from GMAC. According to the T&C's under GMAC the same terms apply to MAS 5!

In answer to your'e question, yes I did go via a broker who I gather is no longer trading!
It was originally a discounted rate till 2007, which then reverted to a Standard Variable rate! which I naively thought was linked to B of E rates as no-one ever bothered to explain otherwise!
To suddenly increase by another 0.75 due to 'Market Forces' seems ludicrous!
I suspect I'm not the only person this has happened to,what worries me is that this may become the norm with all lenders moving away from the usual reasons for interest rate rises to a 'free for all' amongst the banks

Sorry 42man if iv'e messed you around! don't give up on me though Pls

When did the transfer from Gmac to Brittania take place? On transfer of mortgages, either the mortgage deed will have a clause allowing the lender to transfer the mortgage to another, or the lender will seek the consent of the borrower. Which ever way permission is given, it will normally be subject to conditions, including that the borrower will not thereby be prejudiced.
There is little effect on the borrower if a mortgage is transferred as the original conditions of the contract remain in force. However, Gmac should have seeked your specific consent on any transfer under which the lender would cease to "exercise discretion in the setting of the mortgage interest rate". Gmac are currently flogging many of their mortgagors to other lenders for liquid assets as they are currently cash poor.
Re the broker that set this up with you; it is the case that many brokers have packed in since the crunch due to lack of business. If it was an advised case, all the products should have been explained to you and backed up in a "reasons why" letter. You should have received a copy of this from the broker before the mortgage completed?
A discounted rate is a percentage below the lenders standard variable rate at the time the mortgage was completed. Lenders have their own SVR which is not attached in any way to the Bank of England base rate. Again, conditions relating to the interest rate charged on a mortgage are laid down in the conditions. The terms cannot be changed retrospectivley, so the conditions at completion of the mortgage are those which apply throughout.
If I were you, I'd write to Britannia with this info and see what their response is and also request their complaints proceedure. You could still chase the broker if the advice given was not clearly explained and documented

Hiya Zander,
that's alot to take in, I'm going to trawl through the paper trail to see what I can dig out, but I'm sure the original T&C's don't include Market Forces!
How can I pursue the broker if they've gone under

What a pain. I also read that most new fixed rate deals are going up due to "market forces" - the cost of getting money for banks to lend appears to be increasing.

Originally Posted by Bincrunched

Hiya Zander,
that's alot to take in, I'm going to trawl through the paper trail to see what I can dig out, but I'm sure the original T&C's don't include Market Forces!
How can I pursue the broker if they've gone under

Financial Services Compensation Scheme. Call them on 020 78927301 with the name of the broker no longer trading plus the relevant info on the mortgage product advised.

What a pain. I also read that most new fixed rate deals are going up due to "market forces" - the cost of getting money for banks to lend appears to be increasing.

Hi leeds100
I thought that the increase in the cost of new monies may be affected,but they had already allocated the money to my mortgage when I first took it out! so how do 'Market Forces' affect me? I'm simply repaying the original loan!
Methinks this is a ploy to simply increase rates at will!

Thanks for not abandoning me 42Man!!

No, I didn't exactly mention Libor rates just in case their response is that my SVR is not dictated to by Libor! You know how they all like to twist & turn!
I have asked them what they mean by "Market Forces"? as this is not highlighted in my T&C's.
Their T&C's state:
3.1 If the interest rate is the SVR we may vary it for any of the following reasons:
(a) to reflect a change which has occurred, or which we reasonably expect to occur, in the BOE base rate or interest rates generally.

(b) to reflect a change which has occurred, or which we reasonably expect to occur, in the cost of the funds we use in our mortgage lending business.

(c) to bla bla bla (as Above) in the interest rates charged by other lenders.

(d) to reflect a change in the law or a decision by a court; or

(e) to reflect a decision or reommendation by an Ombudsman, regulator or similar body.

Where does it say anything about 'Market Forces' ?
Any views are much appreciated

Hi Zander,

Thanks for the info on the FSCS, however the number appears to be a fax.No worries I'll do some digging.

To answer a few of your'e questions, I purchased in March 2006, GMAC as the lender Via a broker, It was transferred onto MAS 5 in June 2006! I had a discounted rate till March 2008 then went onto SVR with MAS 5

Historically they have followed the BOE rates, I have a letter they wrote to me 2008 in answer to a query I had re: the reduction of interest rates.
They state: " Regarding the recent reduction in the BOE base rate, we can confirm that our standard variable rate will reduce in line with this reduction"

They are now moving away from the BOE rates to 'Market Forces' ugh!!
How can that be 'Fair'

I intend to!!!
but I Know they will ignore me and treat me in the usual manner that the banks have adopted (as just an ignorant member of the public that we can rip off COS WE CAN!!!!)
Youv'e probably gathered that I'm sooo angry at these institutions and the way that they have been allowed to treat the public! particularly in this awful economic climate!
The hardest part is all the stress,work & time we have to put in just to be heard! grr grr

Originally Posted by Bincrunched

Hi Zander,

Thanks for the info on the FSCS, however the number appears to be a fax.No worries I'll do some digging.

To answer a few of your'e questions, I purchased in March 2006, GMAC as the lender Via a broker, It was transferred onto MAS 5 in June 2006! I had a discounted rate till March 2008 then went onto SVR with MAS 5

Historically they have followed the BOE rates, I have a letter they wrote to me 2008 in answer to a query I had re: the reduction of interest rates.
They state: " Regarding the recent reduction in the BOE base rate, we can confirm that our standard variable rate will reduce in line with this reduction"

They are now moving away from the BOE rates to 'Market Forces' ugh!!
How can that be 'Fair'

Did they confirm that ALL reductions in BOE base rates would be passed on to their customers? It's up to the lender if they pass the cuts on or not. I must say I've never heard of your lender, even as a niche lender of Britannia. Lenders fund their products on "swap rates" which are higher than libor resulting in higher priced deals, however, I've not heard of lenders base rates going up without a rise in interest rates. Sorry about the FSCS number being fax.