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GMAC and LIBOR rates example


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Hi - I have been checking the info that GMAC gave me for an interest only mortgage, on reading through their tariff booklet and Mortgage Guide 2000, for Interest Rates it says the following:

"The interest rate charged will be based on "LIBOR" plus an additional amount (a "margin") e.g.3% over the Libor rate. This means that if LIBOR were at 7%, the interest rate would be 10%. The margin applied will depend on the type of scheme you are taking and your personal and financial circumstances and this will be set out in your Mortgage Offer."

 

OK - I notice that little bit about your circumstances, which sounds like "we will hit you with an enhanced rate if you have any adverse credit" - lol, then says:

 

"To help you understand how a change in the interest rate might affect your monthly payments, a typical example is given below assuming a 3 month LIBOR rate of 7.56% on a mortgage loan attracting interest of 3%, giving a total charging rate of 10.56%.

 

EXAMPLE: Based on a residential, interest only mortgage loan of £50,295 (Initial mortgage loan of £50,000 with a £295 arrangement fee added on a property valued at £75,000 repayable at the end of a 25 year term. Included in the calculation of the total amount payable and APR are: Arrangement fee £295, T.T. fee£30, Non block Insurance fee of £40.00, Valuation fee £220, Legal fees £350, Redemption Admin fee £155 payable at the end of the 25 year mortgage loan term. 300 gross monthly payments of £442.60. Total amount payable £183,905.00. The APR is 11.3% assuming that the 3 month LIBOR remains at 7.56% throughout the 25 year term.

For each 1% change in the charging rate, the gross monthly payment would change by £41.91p."

 

Hope this is helpful.

Edited by iconoclash
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So what happens when "LIBOR" has been "manipulated" by the likes of Barclays/NatWest/HSBC etc.

 

And we end up paying more for our mortgages than we should do? - because the LIBOR rates are

higher then they should be.

 

Who do we take action against - or make a group claim?

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hi- i don't know much about it but even i can see that £40 on a 50k mortgage for a one point move is a lot more for many of us on higher mortgages and some organisations are saying that it would have evened itself out, but I'm thinking any manipulated rate must surely put the whole contract in doubt. I havent see any statements from the likes of the OFT, FSA about it either - has anyone any more info?

 

thanks

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I too have LIBOR rates and have wondered since all this kicked off if I was being ripped off. I don't really understand how this works but in my mind, if the Bank of England rate is not moving why does LIBOR move

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Scandal that could ruin banking giants: U.S. lawyers prepare to sue financial firms for hundreds of BILLIONS over global interest rate-fixing

 

Read more: http://www.dailymail.co.uk/news/article-2168473/Libor-scandal-ruin-banking-giants-US-lawyers-prepare-sue-financial-firms-hundreds-BILLIONS.html#ixzz28ER1Oqpg

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hi - i have two cases with the FOS at the moment concerning costs/charges of mortgage companies and both used libor rates - but - at no point has the FOS even looked at the issue. After years of 'investigation' they do not seem willing to uphold complaints - it seems they are over cautious and want a video of the whole process practically before finding for the consumer - I know of another case where the customer had good cause against GE under Unfair Terms but they refused to look at it - so, hmmm, yes, a class action would be a good route to take as there is little else for the consumer, unless you can afford a barrister.

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Hi,

 

Maybe posting in the wrong place but I have a Mortgage with the BOI and they have just put my Mortgage up 50% which is nearly £300 a month more! I am absolutely furious and have no idea if anything can be done about this? I also know that all the other companies are following but at rates of 0.5% or a little bit more not 50%. Surely that is completely unreasonable since we have had to bail the b*****ds out in the first place!

 

I was thinking of writing to my local MP? Or maybe starting something like a petition for this as I am sure that many of you have Mortgages within the RBS group?

 

We are all in an economy meltdown as it is and then having to bail out the banks, people are struggling to keep their homes, food, work and family's together because of all of this hence why the BOE has lowered the rate to a record 0.5% and then the Mortgage companies (especially once we bailed out) have raised their SVR to whatever they want to! This is very unfair and something needs to be done before many more people end up losing their houses including myself.

 

Is there anything we can do? Is a petition a good idea? If anyone has any views, ideas of what we can do then please let me know what your thinking.

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hi - there must be lots of people who had mortgages based on libor and it would be nice to see a graph of how the rates were altered - I need it spelt out - lol. I think my mortgage was in place when it was only higher so wouldn't have evened out with lower rates in another period and since my contract is/was with the lender directly, they would have to answer to it, whether they in turn counter-sue the culprits is up to them.

any ideas? fraud act?

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Hi - I have been checking the info that GMAC gave me for an interest only mortgage, on reading through their tariff booklet and Mortgage Guide 2000, for Interest Rates it says the following:

"The interest rate charged will be based on "LIBOR" plus an additional amount (a "margin") e.g.3% over the Libor rate. This means that if LIBOR were at 7%, the interest rate would be 10%. The margin applied will depend on the type of scheme you are taking and your personal and financial circumstances and this will be set out in your Mortgage Offer."

 

OK - I notice that little bit about your circumstances, which sounds like "we will hit you with an enhanced rate if you have any adverse credit" - lol, then says:

 

"To help you understand how a change in the interest rate might affect your monthly payments, a typical example is given below assuming a 3 month LIBOR rate of 7.56% on a mortgage loan attracting interest of 3%, giving a total charging rate of 10.56%.

 

EXAMPLE: Based on a residential, interest only mortgage loan of £50,295 (Initial mortgage loan of £50,000 with a £295 arrangement fee added on a property valued at £75,000 repayable at the end of a 25 year term. Included in the calculation of the total amount payable and APR are: Arrangement fee £295, T.T. fee£30, Non block Insurance fee of £40.00, Valuation fee £220, Legal fees £350, Redemption Admin fee £155 payable at the end of the 25 year mortgage loan term. 300 gross monthly payments of £442.60. Total amount payable £183,905.00. The APR is 11.3% assuming that the 3 month LIBOR remains at 7.56% throughout the 25 year term.

For each 1% change in the charging rate, the gross monthly payment would change by £41.91p."

 

Hope this is helpful.

 

 

I would strongly suggest that you check that the Libor rate used for the purposes of calculating your effective interest rate was the correct Libor rate. What I am saying is that there are now examples of lenders (sub-prime usually) using an inflated Libor rate rather than the actual Libor rate. For example 3 month Libor might have been, say, 1.2% on September 30 2010 (or whatever date your rate was set, you can check these rates as they are published on the internet); however you may find that your lender used a Libor rate which was higher than this! It takes some hard work but I have found this to be the case and have argued it successfully in court (as has another CAG member).

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Hi - thank you but how will I discover if the rate they quoted as being in use at specific times in accurate please?

 

First: obtain the rates and dates (for the the rates settings) from your lender.

 

Second: check that the rates are correct for the dates via the internet or CAG users.

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I would strongly suggest that you check that the Libor rate used for the purposes of calculating your effective interest rate was the correct Libor rate. What I am saying is that there are now examples of lenders (sub-prime usually) using an inflated Libor rate rather than the actual Libor rate. For example 3 month Libor might have been, say, 1.2% on September 30 2010 (or whatever date your rate was set, you can check these rates as they are published on the internet); however you may find that your lender used a Libor rate which was higher than this! It takes some hard work but I have found this to be the case and have argued it successfully in court (as has another CAG member).

 

hi that's great i had a mortgage with them from 2001 to 2009 well stung by them

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hi that's great because still waiting for pay out from them on charges being loaded on debt has any on took them on in court ? ?

 

Not that I am aware of; however if they took you to court (on, say, arrears) then you have an interesting defense which will cause considerable confusion as to what the arrears actually are.

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hi that's great i had a mortgage with them from 2001 to 2009 well stung by them

 

Well, I would be very interested in learning what rates of interest you paid: if they charged you the same Libor rates or different Libor rates than they charged me or others. Do you still have your mortgage statements?

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i had intrest only for a while was paying 10 % off later in the week will try to the maths as they loaded arrears on my debt non dd and 50 pounds a month

 

has this gone to court ? about libor

 

The Libor issue has gone to court via two seperate CAG members. Kensington seems unwilling or unable to present the courts with the evidence requested by the courts.

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Hi - thank you but how will I discover if the rate they quoted as being in use at specific times in accurate please?

 

 

 

 

Three arrested by SFO in Libor probe

By Caroline Binham, Legal Correspondent

Three British men have become targets of the first arrests in the sprawling worldwide probe into manipulation of Libor, the key benchmark bank rate.

The UK’s Serious Fraud Office said in a short statement on Tuesday that it had arrested three men aged 33, 41 and 47, and that the suspects were “all British nationals currently living in the United Kingdom.”

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