Northern Rock: US firm 'misled' UK government on mortgages

RestlessNatives

RestlessNatives

Striker
Contributor
Government 'misled' on Northern Rock loans

I'm a little torn on this one.
On the one hand, if the company promised to offer new mortgage rates when it took them over, then it should have done.
On the other, the customers are not 'trapped' because of the takeover, they are trapped because of their financial circumstances and taking on mortgages they can't afford. This situation could befall any one of us with a mortgage no matter who the lender.

*I am willing to be corrected if there is now a law where mortgage companies are obliged to offer you a better rate (possibly over a longer term) if you can't afford it.
 


RestlessNatives said:
Government 'misled' on Northern Rock loans

I'm a little torn on this one.
On the one hand, if the company promised to offer new mortgage rates when it took them over, then it should have done.
On the other, the customers are not 'trapped' because of the takeover, they are trapped because of their financial circumstances and taking on mortgages they can't afford. This situation could befall any one of us with a mortgage no matter who the lender.

*I am willing to be corrected if there is now a law where mortgage companies are obliged to offer you a better rate (possibly over a longer term) if you can't afford it.
Click to expand...

it is a puzzle this article

company took it over about 2015 and said then they would reduce the mortgage rate. however company have said they have not been able to put the right people in place in order to do that.

I cant fathom it out, why the mortgage holders cannot leave and go to another provider. One family is paying £2500 a month on their mortgage, which would be so massive an amount for most of us. Why it is that big, is unclear.

If when the company took over that part of northern rock and it said during the negotiations to take over, that it would reduce the interest rate, then they should have reduced them
 
soapster said:
it is a puzzle this article

company took it over about 2015 and said then they would reduce the mortgage rate. however company have said they have not been able to put the right people in place in order to do that.

I cant fathom it out, why the mortgage holders cannot leave and go to another provider. One family is paying £2500 a month on their mortgage, which would be so massive an amount for most of us. Why it is that big, is unclear.

If when the company took over that part of northern rock and it said during the negotiations to take over, that it would reduce the interest rate, then they should have reduced them
Click to expand...

It's certainly a good question. How difficult is it to refinance your loan? Over here it is fairly straight forward to change your loan and get a better rate. The only issue I can assume is that there isn't the equity in the property to refinance.

What are mortgage rates in the UK at the moment??? Over here the standard is about 5% on a 30 year mortgage.
 
njmackem said:
It's certainly a good question. How difficult is it to refinance your loan? Over here it is fairly straight forward to change your loan and get a better rate. The only issue I can assume is that there isn't the equity in the property to refinance.

What are mortgage rates in the UK at the moment??? Over here the standard is about 5% on a 30 year mortgage.
Click to expand...

Loads took out the ‘together 125% mortgage’ with Northern Rock and are now screwed.
 
soapster said:
it is a puzzle this article

company took it over about 2015 and said then they would reduce the mortgage rate. however company have said they have not been able to put the right people in place in order to do that.

I cant fathom it out, why the mortgage holders cannot leave and go to another provider. One family is paying £2500 a month on their mortgage, which would be so massive an amount for most of us. Why it is that big, is unclear.

If when the company took over that part of northern rock and it said during the negotiations to take over, that it would reduce the interest rate, then they should have reduced them
Click to expand...
Because they’ll have a loan bigger than the value of their house. No other lender will want, or be allowed to offer to refinance.

njmackem said:
It's certainly a good question. How difficult is it to refinance your loan? Over here it is fairly straight forward to change your loan and get a better rate. The only issue I can assume is that there isn't the equity in the property to refinance.

What are mortgage rates in the UK at the moment??? Over here the standard is about 5% on a 30 year mortgage.
Click to expand...
Anywhere from 1.5% to 3% being the highest for high loan to value.
 
Longy said:
Because they’ll have a loan bigger than the value of their house. No other lender will want, or be allowed to offer to refinance.


Anywhere from 1.5% to 3% being the highest for high loan to value.
Click to expand...

Shit, if rates were that low here I would hardly even have to work for my money. I thought I was getting a great deal when I closed on my house with a 3.25% rate.
 
RestlessNatives said:
Government 'misled' on Northern Rock loans

I'm a little torn on this one.
On the one hand, if the company promised to offer new mortgage rates when it took them over, then it should have done.
On the other, the customers are not 'trapped' because of the takeover, they are trapped because of their financial circumstances and taking on mortgages they can't afford. This situation could befall any one of us with a mortgage no matter who the lender.

*I am willing to be corrected if there is now a law where mortgage companies are obliged to offer you a better rate (possibly over a longer term) if you can't afford it.
Click to expand...
Sort of. The FSA (now FCA) brought rules in about treating customers fairly not so long ago:

  • Outcome 1 - Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture
  • Outcome 2 - Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly
  • Outcome 3 - Consumers are provided with clear information and kept appropriately informed before, during and after the point of sale
  • Outcome 4 - Where consumers receive advice, the advice is suitable and takes account of their circumstances
  • Outcome 5 - Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect
  • Outcome 6 - Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.
They are supposed to offer products which are competitive to existing customers, although in my experience the worst culprits for not doing this are the adverse credit lenders. I'll get a customer who's mortgage is with Precise or Landmark mortgages and they won't offer them a new deal, just the standard variable rate which is sky high anyway.
 
Even at 5% (which is on the high side in the current market but im sure a 95% LTV one wont be far off) its still quite low historically. Early 2000's think I was paying around 6 - 6.5%

So buying a house where you'd struggle with a 5% rate is just highly irresponsible imho.
 
Le Chuck said:
Even at 5% (which is on the high side in the current market but im sure a 95% LTV one wont be far off) its still quite low historically. Early 2000's think I was paying around 6 - 6.5%

So buying a house where you'd struggle with a 5% rate is just highly irresponsible imho.
Click to expand...
Stress tests on applications are 7.24% now. So hypothetically anyone buying now should be able to afford 5%. That said we don’t know what mad product Northern Rock gave (somebody mentioned 125% LTV before) & how that families circumstances have changed since then. I did self certification when I got my first mortgage in 2007 when I was self employed. Luckily I didn’t overstretched myself, but self certificationwould never be allowed these days.
 
njmackem said:
It's certainly a good question. How difficult is it to refinance your loan? Over here it is fairly straight forward to change your loan and get a better rate. The only issue I can assume is that there isn't the equity in the property to refinance.

What are mortgage rates in the UK at the moment??? Over here the standard is about 5% on a 30 year mortgage.
Click to expand...

If rates “normalise” here to around 5% it’s reckoned around two million wouldn’t be able to afford to pay their mortgage.
 

Back
Top