Birmingham Midshire Didn’t Lower Their Rates- I’m Remortgaging

On the 6th of December 2007 the Bank Of England lowered interest rates from 5.75% to 5.5%. I was expecting the drop and I was actually looking forward to the drop as I assumed it would reflect on my variable rate. I was eagerly waiting for Birmingham Midshire, my mortgage lender, to send me a letter informing me that they would follow suit with the BoE (Bank of England) interest rate and lower my variable rate. Unfortunately, I never received that fucking letter

Since I took out a mortgage with Birmingham Midshire (July 2006), the BoE increased rates 4 times, and immediately after I got letters from my lender showing no hesitation to increase the variable rate. As soon as the rates lower, there seems to be no such desperation to follow suit. Perhaps they thought they could not only continue getting people to pay high rates, but also save money on paper and printing. Annoying to say the least.

I guess in hindsight, opting for a tracker mortgage or even fixed rate would have been more beneficial. But that’s life.

What’s more annoying is that a lot of lenders actually DID lower their rates. But the credit crunch has caused a lot of banks a lot of problems, so I imagine the lenders that didn’t lower their rates are trying to claw back as much money as possible. That tells me that Birmingham Midshire is probably one of the lenders that are taking big hits from the current credit crisis.

Experts and optimists are all predicting another drop in rates in January- and there’s still no guarantee that lenders will lower rates for borrowers on variable rates. I think i’d rather remortgage with a lender that is in a better position, consequently it would be more likely that borrowers will benefit from the reduction in BoE interest rates.

It’s not MY fault that my lender carelessly got greedy and lent their money out to people that can’t afford payments, hence the suspected struggle. Of course, that’s speculation, but that’s most likely what happened, and now the people that have made every payment on time are suffering! You’d think they would at least lower rates for the borrowers that do make their payments. I guess ‘customer loyalty schemes’ and such are beyond them.

According to the terms & conditions of my mortgage policy, I can legally remortgage in a few months time without suffering any penalties, so that’s exactly what I’m going to do. I planned on shopping around for a new mortgage regardless, but now I’m pretty positive I’m going to find a better deal/lender. On that note, may I take a moment to direct you all to this useful article, The Importance Of Remortgaging.

See ya later, Birmingham Midshire, you greedy fuckers. It’s been real emotional.

UPDATE

I love BM =]
Are Birmingham Midshire cutting their rates?. YES, they are.

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Talk / 4 Comments left so far

Sharif wrote this on 2007-12-28 20:29:54 Your own mortgage rate depends on libor, i.e. the rate at which banks lend to eachother. Just because BM won't give you a cut, it doesn't mean they've got heavy subprime exposure (although who knows). Rather, libor rates remain higher than the BoE base rate because banks are scared to lend to eachother, due to the whole subprime crisis and credit crunch.

Any providers that have dropped their rates are probably using this only as a promotional/loss leader tactic, e.g. they claw it back through higher fees.

Also, considering the global scope of the credit crisis, it's pretty narrow minded just to blame BM for not giving you a cut. Most of us are going to be affected by this in some way, whether we've behaved responsibly or not... 1

The Landlord wrote this on 2007-12-28 20:34:30 Hey Sharif,

It doesn't make sense to say it's a promotional tactic, because the drop applied to existing customers on variable rates.

I'm not blaming BM for anything. I'm just saying that other lenders dropped their rates and BM didn't. So why shouldn't I remortgage with another lender that is lowering their rates? 2

Sharif wrote this on 2007-12-28 22:45:31 Hi, I take your point on rate cuts and existing borrowers. But I still think there's a wider promotional aspect to the cuts (from the bigger lenders at least). Nationwide and Halifax achieved a lot of media exposure and editorial mentions following the BoE decision, as they were widely reported to be dropping their SVRs whilst others weren't.

This looks like pretty good public relations to me, as to get equivalent exposure via advertising would cost a fair amount. And they can can always make the difference back in some way as I suggested before, maybe with higher fees or raising their non-SVR mortgage rates, etc.

Anyhow, I guess I'm trying to say that money in general will still be more expensive to borrow, for a while at least. But like you say you're right to expect a better deal from remortgaging, so good luck with that when the time comes - I think there are still some good deals out there.

I read an interesting book on foreign currency mortgages the other day - have you considered going down this route with your investment debt? 3

The Landlord wrote this on 2007-12-29 05:12:38 Hey Sharif,

I've looked into foreign currency mortgages. However, It's not been advisable, as you are taking the foreign exchange risk as well. For example, if you had got a Yen mortgage 6 months ago you would now be looking at a 10% bigger debt to repay than you originally had. 4

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