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  #21  
Old 06.12.2012, 23:02
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Re: Changing banks to benefit from mortgage rate ?

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Dear all, sincere thanks for all the advice. I now realise I am completely stuck in the 'fixed' mortgage but will try to negotiate something with my unfriendly banker. There is no way I could pay the figures quoted here 'to get out of the contract', so I'll accept the defeat, unless some brilliant Forum banker can come up with a viable solution ! Thanks again, Daniella
If its any kind of help, I'm currently negotiating a settlement with a bank in respect of some borderline illegal actions regarding my own mortgage, and they are offering cash, waived fees, lower rates for future mortgages as settlement etc, but the one thing that they say is sacrosanct is the interest rates on the existing mortgages. I'm not close enough to the industry to know why that is untouchable, but it just seems to be so
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  #22  
Old 07.12.2012, 02:30
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Re: Changing banks to benefit from mortgage rate ?

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If its any kind of help, I'm currently negotiating a settlement with a bank in respect of some borderline illegal actions regarding my own mortgage, and they are offering cash, waived fees, lower rates for future mortgages as settlement etc, but the one thing that they say is sacrosanct is the interest rates on the existing mortgages. I'm not close enough to the industry to know why that is untouchable, but it just seems to be so
maybe they did a deal with another party so that they eliminate their rate risk. then if they change this, they have to find some bean counter to calculate what this means and then the whole thing just gets too complicated and messy to be worth getting into?
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Old 07.12.2012, 09:44
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Re: Changing banks to benefit from mortgage rate ?

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If you are able to show your existing bank a quote from another that is more competitive, tell them they can keep your business if the under cut the quote. If they can't take the quote. But there will be setting up charges for a new mortgage - this is why banks have head offices made of marble...
And to make this point even more clear, you will probably be charged a fee for a quote from whichever bank you do NOT choose. See the recent thread about UBS charging for a mortgage quote when the customer ultimately chose another bank.
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Old 07.12.2012, 13:10
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Re: Changing banks to benefit from mortgage rate ?

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but the one thing that they say is sacrosanct is the interest rates on the existing mortgages. I'm not close enough to the industry to know why that is untouchable, but it just seems to be so
Generally, simplistically, the bank hedges fixed rate mortgages with fixed rate borrowings of the same maturity, using eg an interest rate swap. They would have to unwind interest rate swaps that are out of the money, at a cost to them.

OP, you are not being ripped off, you are getting exactly what you signed up for: the security of a fixed monthly payment regardless of whether rates went down or up. Could you honestly say you would have made the post if the rates had gone up.

If you dont want the "[opportunity] cost of hedging", say because you can afford the exposure to the market, get a LIBOR mortgage and pay c.0% plus the banks margin, say 0.5-1.5% depending on your negotiating power.
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