The Skipton Building Society has shown its true colours by announcing plans to raise its standard variable loan rate from 3.5% to 4.95% effective from 1 March.
Doubtless Skipton's 100,000 borrowers, who had up until now been guaranteed that the variable rate would not rise while Bank of England base rate stayed at 0.5%, will be crying "foul".
Skipton doesn't care, because it refers all such "wingers" to the small print in it loans' agreements.
What does the small print say?
The magic phrase (that can be used by any bank/lender to change to rules as they go along) "exceptional circumstances".
Skipton claim that they are suffering from competition, such as that provided by National Savings & Investments (NS&I).
A lousy excuse from a lousy industry.
The financial services industry in Britain truly stinks, and should be thoroughly disinfected. No one should trust any financial institution that they have dealings with.
This all but makes the Bank of England's base rate irrelevant.
The BoE's Base Rate IS irrelevant, and has become increasingly detached from reality over the last 2 years.
ReplyDeleteAs a Building Society, Skipton has picked up a disproportionate share of the cost of bailing out the banks over the last 2 years (as the cake is shared on the basis of retail deposits); and has been hit (along with other societies) by the FSA's requirement that it reduces its reliance on wholesale funding, replacing it with retail. Both of these put BS's at a significant competitive disadvantage when compared with the state-backed banks .....
It's hard to see how the events of the last two years could be described as anything other than exceptional. But hey, why spoil a good story with a balanced report ....??!!
It is not often that a story breaks that fundamentally changes the view of a sector in the public's mind....Since the events of 2008 and the credit crisis we have been told time and time again that in the finance sector trust is everything. Well, if you are one of the 64,000 mortgage holders possibly affected by this "exceptional move", what are your trust levels in your building society today? You were told when you took out that shiny new mortgage that your standard variable rate would never be more than 3pc above the Bank of England base rate. Until, that is, the building society decides otherwise.
ReplyDeleteWho decides what is an "exceptional circumstance"? What is the legal definition? Were mortgage holders clearly told when they took out the mortgage that the society could act in this way? And what does it mean for the building society sector as a whole?
http://www.telegraph.co.uk/finance/comment/kamal-ahmed/7044318/What-does-Skiptons-handbrake-turn-on-mortgages-mean-for-building-societies.html
You really should get your facts straight before going public like this Ken.
ReplyDeleteAs the first comment says, Building Societys have paid way over the top to bail out the Government run banks.
Now it's not just Skipton's borrowers who will suffer but also the hundreds of staff about to be made redundant.
You should e taking this out on one G Brown and his cronies!
It is an issue of trust, something that once was the byword of people in finance (eg "my word is my bond").
ReplyDeletewrt Skipton's actions they may find themselves losing a chunk of their borrowers, because of the lower lending rates offered by Post Office and Northern Rock announced today.