Mortgage Interest rates inreased DUE TO MARKET FORCES

[Bincrunched]

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????????

[zander]

Who's your lender?

[Bincrunched]

Hi Zander thanks for responding

It was GMAC but they sold it on to Amber homeloans!

[42man]

What an absolute shocker....disgusting, did you get the original loan through a broker by any chance ? Any PPI on it ?

[42man]

I'd have a close look at your agreement with them....

 

From Amber's website !!

 

AHL will:

 

• Have due regard to the interests of customers
  
• Conduct its business with integrity
  
• Be flexible in our response to customers reflecting their needs and circumstances
  
• Keep promises and deliver on them
  
• Ensure errors are corrected promptly and in line with customers wishes
  
• Ensure all complaints are fully investigated and are approached in a consistent manner
  
• Communicate with customers in a clear, fair and not misleading way, avoiding the use of jargon
  
• Ensure all staff are appropriately trained and knowledgeable to enable them to carry out their roles
  
• Instil a culture of treating customers fairly into the business.
  

[sequenci]

FOS complaint?

[Notty]

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

[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

[Bincrunched]

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!

[zander]

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

[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:?:

[leeds100]

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.

[zander]

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.

[Bincrunched]

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!

[42man]

Libor is at 1.253.....they are doing it because they are being greedy......I wonder how this would fare up under the unfair relationships question !!!??

 

Libor: Latest inter-bank lending rate with charts | This is Money

 

Have you written to them to ask exactly why they are increasing when interest rates are at an all time low ?

[Bincrunched]

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.

 

© 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

[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'

[42man]

I'd strongly dispute the increase as they have NO basis whatsoever to increase their rates apart from their own greed.....

[Bincrunched]

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

[zander]

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.

[Bincrunched]

Hi Zander

No probs about the number!

These people are what is described as I believe,'Sub Prime' lenders who took over a mortgage book full of problematic mortgages to feed their greed,they probably thought they were going to make a mint but instead got stuck! Now they are trying to claw their way out of trouble by getting us to pay!

 

If they have set a precedence by following the BOE historically wouldn't you reasonably assume that they would continue to do so? particularly at a time when rates are at an all time low!

How would a court perceive the sudden change I wonder from BOE to 'Market Forces' as a reason?

[zander]

Hi Zander

No probs about the number!

These people are what is described as I believe,'Sub Prime' lenders who took over a mortgage book full of problematic mortgages to feed their greed,they probably thought they were going to make a mint but instead got stuck! Now they are trying to claw their way out of trouble by getting us to pay!

 

If they have set a precedence by following the BOE historically wouldn't you reasonably assume that they would continue to do so? particularly at a time when rates are at an all time low!

How would a court perceive the sudden change I wonder from BOE to 'Market Forces' as a reason?

 

Unfortunately, reason doesn't come into it as far as the lender is concerned, they will pass on cuts as they see fit but will increase their rate as soon as there is a change in base rate. I'm not sure a court action would be applicable to this, however, as with the FSCS, the aim is to put you back into a position you were in before any problems with lender/broker occurred.

[Bincrunched]

Hi Zander

Fact is there has NOT been a change in base rates!!! Thats the basis of my argument, 'Market Forces' are what they claim is the reason for the rate increase!! What does that mean?

To me it appears that they are out to get money back into their coffers any way they can.

[zander]

What is your lenders SVR?

[Redfish]

Very interesting thread Bincrunched. We are in a somewhat similar position. We got our fixed rate GMAC mortgage through a broker, then GMAC sold on to Mortgage Express, we moved onto a discounted variable rate after the fixed rate ran out which we assumed was tracking the BoE base rate...we got some cuts passed on then it stopped. Unlike you our lender hasn't increased the amount, but we got annoyed when they stopped passing on the cuts. We complained, and then did some research on their website and publications to back up our arguments - and then wrote a complaint to our MP and to the FOS (after Mortgage Express gave us a pathetically useless reply). We based our complaint on 'lack of disclosure' at the time of signing up. There is nowhere that shows how the lender determines their SVR (and we were not even told it was an SVR, as our lender has another variable rate which is a PVR and we were just given 'a discounted variable rate' - which could mean either).

 

It might be useful for you to collect anything and everything the lender has put out for you to reasonably determine SVR, if that is your rate. Then go at them on the basis of lack of disclosure, once you have their response go to the FOS. It may take several months - we started complaining back in February, then complained to the FOS in March and are still waiting for the FOS to get the lender's response.

 

Having read around these threads though, and another consumer credit support forum, I do think there must be some mileage in the 'unfair' terms legislation, read through this

http://www.oft.gov.uk/shared_oft/bus...act/oft854.pdf

 

What's interesting is now mortgage lenders are required by the regulating authorities to give you a 'key facts' document so you can easily compare products across different companies...presumably because clear and precise information is considered necessary for the borrower to make their decision ... and yet all these lenders are using SVR which is obscurely determined. So you can see there is something here that authorities would find unreasonable... and I don't know what kinds of challenges have been put up on this.

Edited June 14, 2009 by Redfish