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Brokers slam Skipton SVR move

Advisers have hit out at Skipton Building Society’s move to axe the ceiling on its standard variable rate, hiking it from 3.5 per cent to 4.95 per cent.

Money Marketing first revealed that Skipton was to temporarily remove its ceiling, which meant that customers would never pay more than 3 per cent over the base rate.

The lender blamed “exceptional circumstances” for the move and said it plans to reintroduce the ceiling rate once market conditions improve.

Burwood Financial Consultants managing director Peter Suttill says: “I think it sends out a worrying sign to the market. Lenders reneging on deals is a worrying trend.

“It is a matter of confidence. We are trying to restore confidence in the market, and if lenders start doing these sorts of things it inhibits that rebuilding of confidence.”

London & Country technical manager Richard Morea says: “The 1.45 per cent rise is a massive blow to Skipton borrowers linked to SVR, and the timing couldn’t be worse as the latest figures show a larger than expected rise in inflation, stretching finances even further.”

Skipton group chief executive David Cutter says: “While we understand this change will be unwelcome for those borrowers who will end up paying more as a result, we hope that they will understand it is a necessary step that is in the best interests of our membership as a whole, and indeed the society itself, in the long run.”

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Comments

There are 25 comments at the moment, we would love to hear your opinion too.

  1. I’m pleased this has happened. How on earth are Building Societies to make money when they are charging such artificially low rates? Also, it should encourage House Prices to reach their equilibrium level.
    Well done Skipton!

  2. This move has come at a time when the industry needs stability to rebuild confidence with the borrowers, especially with the announcement of the larger than expected growth in inflation.

  3. I take it the above comment was from someone at Skipton.

  4. How can this be Treating Customers Fairly?

  5. I wonder if borrowers could use the same ‘exceptional circumstances’ to suddenly decrease their repayments. Of course not. Another example of lenders making up the rules as they go along. Shame on you Skipton.

  6. I believe that the Skipton has done the right thing and I do not represent or work for any lender. House prices are far too high and need to rebalance. Remove artifical stimulus and cheap borrowing and the resiult on house prices is inevitable – let’s get on with it! Bring it on!!

  7. Do any members of the public actually look at the clauses in their mortgage contract, or indeed, do any mortgage brokers explain to their clients the ‘what if’s’? Nope….they don’t….

  8. Rates go up Skipton win, rates go down Skipton win. By reneging on an agreement David Cutter should hold his head in shame. TCF what an absolute hoot.

  9. Don’t worry, whilst a lot of people will be very angry with this news, in a few weeks time it will be old news paving the way for other lenders to do the same. The FSA’s view is that the banks can put interest rates up, dual price, cross sell and generally do everything in their means to shaft both the financial adviser and the client. I wonder if the FSA would take the same view if an IFA would adopt that same attitude?!!

  10. I would imagine that anyone with a SVR or Discounted mortgage with the Skipton will be looking to remortgage elsewhere. They could well have shot themselves in the proverbial foot!

  11. This is the thin end of the wedge. I have a great deal of sympathy for the building society movement—they depend in the main on what comes in over the counter to finance their lending and the only people who can pay for that are the borrowers. Nationwide have already admitted that their guarantee has cost them £450,000,000. How many of those smaller lenders are hurting badly whilst the arrogant fat-cat banks take money off the tax payer at an unfair advantage?

  12. Surely many more lenders will follow, which in turn should be followed by the now well overdue property crash, particularly if and when it affected the but to let market.

  13. We have an economy and a common economic wealth that is mainly built upon property & finance. While the government allows such vast differentials to continue between base rate and true pay rates for the average person the economy and confidence cannot recover. God help us when the base rate starts to move upwards. I cannot see the banks wanting to give up such profit margins.

  14. Treating Customers Fairly. No doubt the FSA will say that it is ok for lenders to put in a clause in the small print giving them the right to decide what are exceptional circumstances. This is very bad news and will not help to restore consumer confidence in banks and other lenders.

  15. The Skipton right or wrong? I can see both sides however lenders reneging on deals how can this be TCF?

  16. The Skipton is right to put up its SVR if needed to balance the books. BBR is too low and is causing a lot of lenders problems as it does not reflect the cost of funding.
    Would you prefer to see the societies go bust and need to be bailed out by the tax payer.
    I am amazed at the comments from brokers who you would think should understand the market and the cost to lenders of funding their mortgage book.

  17. Agree, main issue is how this fits with TCF – unless of course they are actively encouraging existing borrowers on to more competitive products as long as they suit the client.

  18. Wonder how long it will be before Skipton are taken over by someone? They must be in a pretty bad way to do this. It will also have a negative inpact going forward as their reputation is now in tatters.

  19. Skipton is telling its customers that “……..I don’t care what our accepted agreement was, I am putting my hand in your pocket and take some money from it and I can do it because of the small prints. And I have no morals.”
    I wonder how many repossesions may come about because of this!!!?? And how will judges and the FSA treat this!!??

  20. The FSA have stood by and allowed this to fester to this point, they seem out of step with whats required to bring confidence back to the market.
    Skipton should by any morals be forced to reverse this.
    Q. Is Dave “Cutter” (sic) offering his investor members 4.95% ? to “protect their interests” please do tell? another turkey voting for xmas?

  21. Bravo Skipton. Fixed rate bonds and BBR dictated this I am sure, a brave move. I bet Nationwide will follow suit.

  22. I don’t understand why people are questioning the TCF element of this. The terms & conditions of this mortgage would have clearly stated that the building society could with prior notice adjust the interest rate on the loan. This information would have been available within the providers’ literature (KFD) – The brokers should know this, and more importantly, have explained this to the clients!

  23. Is this not the Skipton “Having its Cake & Eating it!!”.The Customer needs to be able to trust the Lenders Terms & Conditions! How can they do this when the Skipton acts this way.Could it be the Thin End of the Wedge!! Many other lenders will be watching to see what happens & if the Skipton get away with this,others will follow!! The No doubt we will see a stream of challenges just as with the Bank Charges fiasco! The Industry Credability will be damaged & if the extra cost was to be reversed it would no doubt be to late for many home owners.OR am i adding 2+2 & making 5??

  24. The damage this will cause to people yet again by these wreckless bankers is a disgrace. We have generations who will be paying for them and no doubt this is yet another move to ensure that the big fat bonus culture can continue.

    As a Customer, all I can say is clearly this Society lacks any integrity what so ever.

  25. William Kingsley 25th January 2010 at 2:39 pm

    Everyone has the right to do what they see fit to safeguard themselves as long as they are aware of the consequences – Skipton can put up their SVR – some may pay it – some may not – borrowers may be able to change lenders – some may not. Other lenders will follow this lead and the remortgage market may get bigger.

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