Fallout to hit Skipton Building Society
As we covered in one of our earlier articles, the Skipton Building Society has effectively ripped up and rewritten thousands of mortgage arrangements using a get out clause introduced in 2002. The company has used the prolonged period of low base rates in the UK as a means of rewriting the terms of its standard variable rate mortgage which prior to yesterday could not be more than three percentage points above base.
With up to 60,000 mortgage holders affected by the change in the standard variable rate, which will now increase to 4.95% and see the average homeowner paying back an additional £1500 a year, there is sure to be some significant fallout for the building society. There is no doubt that the building society sector has been hammered by the economic downturn and the credit crunch but it is more the inability to attract more and more savers to the UK operation which forced the society's hand.
The margins between savings interest rates and mortgage interest rates were unsustainable going forward and could eventually have brought down the Skipton Building Society. However, when many of the building society's customers signed their mortgage arrangements they did not expect to see a jump from 3.5% to 4.95% overnight. The fact that such a water tight clause was written into the mortgage agreements means there is unlikely to be any legal recourse for customers.
Share this..
Related stories
Buying for buying sake costs £700 million
A report issued today suggests that the average member of the UK population spent nearly £30 on Christmas gifts which were unwanted. It would appear that nearly £700 million has been "wasted" over the festive period on gifts which were bought simply because people felt they had to. How crazy is this? At a time when many in the UK are struggling to pay their mortgage, put food on the table and...
Read MoreHM Revenue and Customs issues new tax deferral procedure
HM Revenue and Customs, the heart of the UK government's taxation service, has this week introduced new procedures regarding potential tax deferrals involving amounts over £1 million. As of 1 April all tax deferral requests regarding amounts of £1 million over will need to be presented with supporting evidence from a totally independent third-party before consideration by HM Revenue and Customs....
Read MoreWhat Is Happening With Equitable Life?
Those poor souls who were customers of Equitable Life before its collapse in 2000 may be in for a surprise compensation bonus from the government after a parliamentary report heavily criticised the role of Treasury Actuaries, Equitable Life management and the Regulator. So what happened?
Between 1950 and 1988 Equitable Life was heavily involved in what is known as the guaranteed an...
Is confidence in the Irish economy misplaced?
The Irish economy has been very much in the news over the last few weeks and months with the collapse of the financial sector, significant government cost-cutting and various altercations with unions. However, there is a general feeling that the economy is on the verge of a turnaround with the Irish Prime Minister, Brian Cowen, suggesting that a return to rapid growth could happen as early as 2010...
Read MoreWhy Are Some Investors Buying Shares When The Markets Continue To Fall?
One peculiar aspect about the stock market which many people cannot get their heads around is the fact that for every buyer there needs to be a seller and vice-versa. So if the markets continue to fall and the doom and gloom is not lifting, why are some people still buying into companies which look as though they are in trouble?
To understand the stock market you need to understand...