Discussion: Should customers be let out of fixed rate mortgages?

[Complainer]

Re: Extrication from Fixed rate mortgage?

I decided to share my opinion on this post a few days ago in the hope that there might be others like me that might take up the fight against the banks. Seems like there a lot of people out there who are angry enough to keep fighting to make this a political issue. Long may that continue and the best of luck to all of you that take on the good fight. This is winnable!

I was however, shocked and disappointed to read some of the comments from those that feel that I should not get out of my fixed rate mortgage. You are all certainly entitled to your opinion but sadly there was a nasty whiff of Irish begrudgery laced through many of those posts. There is even a smugness about many of the comments suggesting that I deserve the pain that my fixed rate mortgage brings upon me. Some even boast about the prized position of their own mortgage arrangement. Enough said.

Can I just clarify if you understand the fact that SOMEONE has to pay for your decision to go fixed rate? If so, please clarify who you propose should pay this?

 

[bond-007]

Re: Extrication from Fixed rate mortgage?

You signed up for a fixed rate, live with it. Simple.

 

[so-crates]

Re: Extrication from Fixed rate mortgage?

I decided to share my opinion on this post a few days ago in the hope that there might be others like me that might take up the fight against the banks. Seems like there a lot of people out there who are angry enough to keep fighting to make this a political issue. Long may that continue and the best of luck to all of you that take on the good fight. This is winnable!

I was however, shocked and disappointed to read some of the comments from those that feel that I should not get out of my fixed rate mortgage. You are all certainly entitled to your opinion but sadly there was a nasty whiff of Irish begrudgery laced through many of those posts. There is even a smugness about many of the comments suggesting that I deserve the pain that my fixed rate mortgage brings upon me. Some even boast about the prized position of their own mortgage arrangement. Enough said.

I don't think anyone quibbles with your getting out of your fixed rate mortgage - there is a path available to do so. Two in fact, the first a penalty in cash, the second a penalty in time (as in wait until your fixed rate period is up). What they quibble with is your assertion that everyone else should pay for your decisions.

You seem to think that this is some sort of rallying point. It isn't. You made a contract. Assuming you are an adult you ought to be able to make contract which means that you are capable of understanding your responsibilities, obligations and privileges. Are you trying to say that you wish to be treated as a child?

Begrudgery by definition is envy - those not on fixed rate don't envy you. So perhaps the whiff of "begrudgery" you detect is you envying those not on fixed rate?

 

[PC100]

Re: Extrication from Fixed rate mortgage?

I decided to share my opinion on this post a few days ago in the hope that there might be others like me that might take up the fight against the banks. Seems like there a lot of people out there who are angry enough to keep fighting to make this a political issue. Long may that continue and the best of luck to all of you that take on the good fight. This is winnable!

Hardly a political issue!

Has there been a dramatic change in your financial situation? - if you or your partner have been laid off or put on a three day week, speak to the bank and they may waive a % of the break penalty and put you on a variable rate or they may take 25 or 50 points off your fixed rate.

If there has been no significant change in your circumstances you will find it difficult to renegotiate.
As another poster pointed out, if ECB rates had gone the other way, would those on fixed rates be offering to pay more to align themselves with those on variable rates? Simplistic but the simple fact is that fixed rate loans are designed to lock you in and protect you from the flucuations of the market.

 

[LDFerguson]

Re: Extrication from Fixed rate mortgage?

As another poster pointed out, if ECB rates had gone the other way, would those on fixed rates be offering to pay more to align themselves with those on variable rates?

I think this argument is weakened in the current climate.

Banks lent a lot of money to developers to build houses. If property prices had continued to rise / no recession etc., these loans would have been repaid and the banks would made a tidy profit and wouldn't have needed any Government Guarantee scheme, NAMA etc.

But things went against the bank and the Government stepped in to help.

Extraordinary times.

 

[Timbo]

Re: Extrication from Fixed rate mortgage?

I was however, shocked and disappointed to read some of the comments from those that feel that I should not get out of my fixed rate mortgage. You are all certainly entitled to your opinion but sadly there was a nasty whiff of Irish begrudgery laced through many of those posts. There is even a smugness about many of the comments suggesting that I deserve the pain that my fixed rate mortgage brings upon me. Some even boast about the prized position of their own mortgage arrangement. Enough said.

Hold your horses there.

What pain? Your repayments are the same as they were when you took out the mortgage. Are you telling us that you took out a mortgage you couldn't actually afford to pay???

Stop whinging. If you want a variable rate, go refinance and fulfil any financial obligations you have to extrecate yourself from yor fixed rate.

There are too many people suffering genuine distress at the moment to worry about your simple case of regret.

 

[darag]

Re: Extrication from Fixed rate mortgage?

As I explained in another post breakage costs for fixed rate loans (or savings for that matter) are real for banks. They've effectively exposed themselves to fixed rate instruments on your behalf when you took out the loan. Allowing you to redeem early which is effectively what you are doing by breaking the term in not some whimsical favour a bank can grant without losing a lot of money.

The government is facing borrowing over 20 billion this year. It's simply nonsensical to suggest they borrow another billion and distribute it to fixed rate mortgage holders. That such an action is being seriously proposed is weird.

 

[Gmol]

Re: Extrication from Fixed rate mortgage?

I decided to share my opinion on this post a few days ago in the hope that there might be others like me that might take up the fight against the banks. Seems like there a lot of people out there who are angry enough to keep fighting to make this a political issue. Long may that continue and the best of luck to all of you that take on the good fight. This is winnable!

I was however, shocked and disappointed to read some of the comments from those that feel that I should not get out of my fixed rate mortgage. You are all certainly entitled to your opinion but sadly there was a nasty whiff of Irish begrudgery laced through many of those posts. There is even a smugness about many of the comments suggesting that I deserve the pain that my fixed rate mortgage brings upon me. Some even boast about the prized position of their own mortgage arrangement. Enough said.

I have a fixed term mortgage and am about half way through it, like everyone else who fixed their mortgage I took a gamble that interest rates would go up and they didn't. It was my choice and I have to live with it. I'm curious why you expect to be allowed change your mind because things didn't work out as you wanted them to? Like everyone else on a FT
contract I would like to avail of the lower variable rate especially after a very significant pay cut but despite the difficulties it brings I have to live with it

 

[Raskolnikov]

Re: Extrication from Fixed rate mortgage?

If the ECB interest rates had rocketed over the last year, rather than fall; how would fixed rate mortgage holders feel if the banks forced onto more expensive variable mortgages because they were losing money?

 

[jodyanne]

Re: Extrication from Fixed rate mortgage?

I wish I had understood about getting out when the rates began to fall. Didn't know enough about the formula to realise that the breakage cost would go up so high as the rates went down. It seems obvious now but wasn't then. Ah well, tough lesson but a lesson

 

[Paulk]

Re: Extrication from Fixed rate mortgage?

I wish I had understood about getting out when the rates began to fall. Didn't know enough about the formula to realise that the breakage cost would go up so high as the rates went down. It seems obvious now but wasn't then. Ah well, tough lesson but a lesson

My sentiment exactly. When applying for my mortgage, I simply accepted what my mortgage broker told me at the time (mid 2007) ie that rates would continue to rise for the forseeable future so fixing was the best option. I simply did not even question this.

Anyway, you live and learn. I just hope that the rates don't increase dramatically by the time my fixed term comes to an end to in approximately 16 months!

I've learned a lot from this site.

 

[minion]

Id love if you could just opt out of a fixed rate.

If that was the case i would fix now so im covered if rates rise, and just opt out if rates fell again. It would be great.

 

[Questionable]

..hmm...I'm with LD Ferguson on this, has anyone mentioned the fact that the Minister for Finance has asked the Financial Regulator to investigate the breakout fees been offered, it seems to be a significant development.

 

[renno rannes]

when i got my mortgage years ago i went for variable rate and soon after it went up and up and up, but i lived with it because it was my choice, the people who fixed knew there mortgage would not go up so had that luxury, now that it went down they dont want it anymore. So thats just tough you cant have it all your way.

 

[DerKaiser]

..hmm...I'm with LD Ferguson on this, has anyone mentioned the fact that the Minister for Finance has asked the Financial Regulator to investigate the breakout fees been offered, it seems to be a significant development.

I think this is a move for more transparency.

The basic idea is that the break out cost should be based on the rate at which the bank could access funds when the mortgage was taken out compared to the rate it can access funds at the time of breakage.

Some people are being quoted unfair break out rates as some banks seem to be setting the parameters in their break out formulas to rates not consistent with the market.

 

[babybisi04]

of course, customers should be allowed to come out of fixed rate depending on their current circumstance, if they're still earning as much as they were when they took the fixed rate, then it's fine, but if not, is it better for banks to reposses customer's homes and then still lose or allow them come out of fixed rate if repayment is too high for them to keep? if the government bailed out the banks from their debts then they should bail out customers from fixed rate.

 

[mf1]

of course, customers should be allowed to come out of fixed rate depending on their current circumstance, if they're still earning as much as they were when they took the fixed rate, then it's fine, but if not, is it better for banks to reposses customer's homes and then still lose or allow them come out of fixed rate if repayment is too high for them to keep? if the government bailed out the banks from their debts then they should bail out customers from fixed rate.

"of course"? That is nonsense. Take the time to read the rational responses to some of the emotive, tabloid headlinism, magic wand waving, self absorbed, naive, irresponsible, clueless ravings of some people who simply will not accept responsibility for their own actions. And I'm not referring to the Banks here!

mf

 

[dublincelt]

Having read through the entire thread, I outline my story here with great apprehension. However here goes, in April 08 I signed up to a fixed rate mortgage of 4.99% with IIB Homeloans. Having paid the developer up to 10k of a deposit I was ready to receive the cheque and complete the house purchase. This is where my first major issue comes in. IIB would only issue the cheque subject to me changing to their new terms which where variable at 5.15%. So the rate and type of mortgage that I had SIGNED up for were changed to suit themselves. Secondly, I was now faced with IIB raising the rate every few weeks so that by August I was on a rate of 5.99%. Up a whole percentage point from the original agreement I had signed.


The biggest fear I had was that the Interest rate continued to rise and I couldnt afford my home so I fixed for 3 years reluctantly at 5.95%



Now I have heard it said that the banks have to charge a breakout fee due to the fact that they have borrowed money on my behalf at a higher rate. However my cheque was issued when they had a fixed rate offer at 4.99%. So where are they getting the justification to quote me €13,905 which is what they have done?

And worse still, how can the bank break me from a fixed rate to a variable without penalty which they did in April08 yet when I try do the same now I get quoted €13,905?

I dont believe their is justification in how this bank have acted and have been allowed to act by an impotent financial regulator.

I would advise anyone negotiating a mortgage to steer well clear of KBC Homeloans, unethical practice does not even come close to how they operate at least in my personal opinion.

 

[NorfBank]

And worse still, how can the bank break me from a fixed rate to a variable without penalty which they did in April08 yet when I try do the same now I get quoted €13,905?

Don't be apprehensive (most of us are friendly here )

Correct me if I'm wrong but it seems you had not drawndown the mortgage on the fixed rate initially so there was no actual breaking of a fixed rate so no penalty would be incurred?

You are being quoted the €13905 because if KBC allow you to break your mortgage and then reinvest the mortgage amount in the market they will get a much lower rate of return as interest rates have fallen significantly since the time you fixed. They are making 5.95% off you whereas for arguments sake they would only get 3% if they reinvested it. They have quantified this loss to be €13905.

 

[elcato]

You signed a deal then you should have been offered it. Did your solicitor not advise at this stage as you should have got the original offer as per signing. Are you sure you signed a legally binding contract or did you just sign a few forms for application ? Something does n't add up here.

And worse still, how can the bank break me from a fixed rate to a variable without penalty which they did in April08 yet when I try do the same now I get quoted €13,905?

I dont understand this. If the original contract was signed as stated then they did not 'break' you from a fixed rate. But obviuosly a bank would allow anyone who wanted to break from a fixed rate to a higher rate. This is just ordinary business sense (in general).

The biggest fear I had was that the Interest rate continued to rise and I couldnt afford my home so I fixed for 3 years reluctantly at 5.95%

So what's the problem ? You are able to afford it for the next 2.5 years as you expected. In the next while rates could rise and you will be in a good position.
The point of this thread is whether people should be allowed break from a fixed rate at no penalty. Your first argument seems to be a problem about whether IIB acted legally in offering you a mortgage. At the end of the day you had an option not to sign. Maybe you should look into the practice of IIB and gather all the relevant docs to see if you have a case to bring to the ombudsman. If the contract was indeed fully binding I would think you have a case.