Who will follow the Skipton's move?
News that the Skipton Building Society has activated a relatively unknown get out clause in mortgage arrangements put in place since 2002 has caught the market by surprise. The decision to effectively rewrite all mortgage arrangements on the standard variable rate since 2002 will see the rate rise from 3.5% to 4.95%. But who will be next to follow?
Now that the Skipton Building Society has effectively broken the mould and in many ways damaged the "friendly" image of the building society sector, it seems only a matter of time before those in a similar position will rewrite their own mortgage arrangements. It is unknown for sure what other building societies may well have similar exceptional circumstance clauses included in their agreements but with the Skipton Building Society struggling we can safely assume that others will be finding it difficult as well.
Unlike traditional UK banks, UK building societies depend more upon savings deposits than their banking counterparts hence the need to attract as many savers as possible. The very fact that the sector has seen net withdrawals over each of the last 11 months is a concern and possibly one of the reasons which prompted the move by the Skipton Building Society. All eyes will be on the sector to see if this move is replicated by any more of the U.K.'s building societies.
Share this..
Related stories
Will we see corporate activity in the UK mortgage industry?
While the UK banking industry has long been a target for overseas predators with an array of well-known names having been snapped up over the last few years, there is a feeling that the UK mortgage sector could well be the next target. As we covered in one of our earlier posts, mortgage lenders from China, Sweden and Israel to name but a few have now targeted the UK market and are in the process o...
Read MoreIs Santander considering a float of UK businesses?
Santander, the enormous Spanish finance group, is considering a potential flotation of its UK operation which now includes Abbey, Bradford & Bingley and Alliance & Leicester. Central to these plans appears to be the possibility of acquiring up to 300 branches from Royal Bank of Scotland which has been forced to reduce its high-street exposure by the European commission. The sale of Royal Bank o...
Read MoreBuy to let self certified funding under threat
Despite the fact that the buy to let market was, at least in the 80s and 90s, a hive of activity in the UK, with many landlords obtaining mortgage funding using so-called "self certified" income statements, this particular avenue is under threat for the future. Buy to let mortgages may now be pulled under the watch of the Financial Services Authority in a move to bring everything under one roof an...
Read MoreHome purchase mortgages double in 12 months
The British Bankers Association (BBA) has today confirmed that 42,238 mortgages were approved in October against 42,073 the previous month. These mortgages are specifically house purchase mortgages, which do not include redemptions and repayments, and show a 98% increase compared to the same period last year. So what exactly does this mean? While there is no doubt that the UK mortgage market an...
Read More1.75m homeowners unprepared for mortgage increase
05/03/2015 A UK charity has revealed that 1.75 million UK homeowners will never have faced a rise in the Bank of England (BoE) base rate before, meaning they may be unprepared for a rise in their monthly payments. Analysis from The Money Charity has shown that there has been 1,762,400 first-time buyers since the BoE last increased the UKs base rate, in July 2007. People who received a mortg...
Read More