The Bank of England is in talks with seven building societies hoping to renegotiate emergency funds made available during the credit crunch. While the building societies – including Chelsea, Yorkshire and Skipton – are not considered in danger of collapse, last week’s downgrading by credit agency Moody’s threatened to breach the terms of the government’s
Nine UK building societies have had their credit ratings downgraded by agency Fitch as falling house prices and the worsening economy are ‘likely to hit profits’. Fitch said that it was particularly concerned with the large exposure of building societies to sub-prime mortgages, buy-to-let loans and high loan-to-value deals. The ratings of a society indicate
Coventry building society has become the first lender to offer re-mortgage deals worth 100 per cent of a property’s value to customers in negative equity. Customers who took out loans of up to 125 per cent who are coming to an end of their mortgage deal can now get a five-year fixed rate deal worth
The Financial Services Authority (FSA) has been accused of complacency in its dealings with building societies. A former FSA worker told Lib-Dem spokesman Vince Cable that poorly qualified FSA officials, who had no background in the industry and didn’t understand its ‘community roots or limitation’, allowed building societies to expand into ‘risky areas’ and more
Meanwhile, John Goodfellow, chair of the Building Societies Association, warned building societies were facing intense and unfair competition for deposits from the partly government-owned banks. He said the sector needed to put into place framework agreements such as that governing Northern Rock, which is unable to offer the top rates to savers on competition grounds.
Some building societies are charging mortgage customers twice as much interest as banks, adding more than £1,000 to the cost of monthly repayments. Building societies say mortgage rates are not being lowered to maintain savers’ levels of return, but research casts doubt on some societies’ claims.
Although Bank of England interest rates have been slashed to 3 per cent, many mortgage lenders still haven’t passed the cut on to borrowers, some of whom are paying 7 per cent or more. The ‘list of shame’ by the Guardian, lists Kent Reliance Building Society as topping the standard variable rate with a rate
Nationwide customers with tracker mortgages will not see further cuts in interest rates, even if the Bank of England drops the base rate again. The lender plans to use a rule in its mortgage contracts allowing it to freeze tracker rates when the base rate falls below 2 per cent. Its decision will affect more
Homebuyers will be prevented from borrowing more than three times their annual salaries under new mortgage rules to be announced this week. As part of a package of banking regulations, 100 per cent mortgages will also be banned. Prospective homeowners will have to provide a deposit of at least 5 per cent, but many banks
Just a couple of weeks after credit agency Moodyâs downgraded nine UK building societies, Fitch has done the same to five. Fitch cut the default ratings of Chelsea, Newcastle, Principality, West Bromwich and Yorkshire building societies because of ‘signs of strainâ on their mortgages as unemployment rises, and has placed Skipton on ‘negative watchâ. A