So it seems that UK incomes are finally starting to creep up but are we actually better off in real terms? Aviva Family Finance Report states that the...
Is UK income rising in real terms?
January 15, 2015
The European Commission’s statistics bureau Eurostat has recently released figures for 2013 showing that the percentage of owner occupiers has dropped...
Owner Occupier figures drop again
January 5, 2015
In the recent budget the chancellor made wide ranging changes to the rental sector and potentially made it impossible for landlords to continue to liv...
How the budget will affect landlords
July 27, 2015
Court Rules on Mortgage Tracker Rate Increase by West Bromwich Building Society
February 10, 2015
At the end of January a case in the High Court was ruled upon “Mark Robert Alexander v the West Bromwich Mortgage Company” in favour of The West Bromwich and made very little impact in the press. So why you ask does that case matter to me.
Well the background to the case was that West Bromwich Building Society has increased the rate on its Buy to Let tracker mortgages by 1.5% even though the Bank of England base rate has not increased. West Bromwich’s assertion is that a clause in its standard terms and conditions allowed it to increase the rate to reflect market conditions even when there was no change to Bank Rate, or to demand early repayment of the loans. They stated “The increase was made to reflect changing market conditions and the need for us to carry out our business prudently, efficiently and competitively and in the best interests of our members”
Why should you care if a few landlords make less money out of their tenants, after all landlords are part of the problem with our housing market aren’t they? Whatever you think about landlords this sets a dangerous precedent to all mortgages, that lenders can increase tracker mortgage rates no matter what happens to the bank of England base rate and state that it’s due to “market conditions” or to put it another more cynical way if their shareholders want the lender to make higher profits.
Mark Alexander produced a screen shot that showed West Bromwich stated on their website “your loan reverts to a variable rate which is the same as the Bank of England Base Rate with a premium of 1.99 per cent until the term end” but this was deemed inadmissible by the ruling judge.
This decision leaves all borrowers in a dangerous position with those having buy to let mortgages more precarious given the relative lack of protection compared to residential mortgage holders.
There are an estimated 1,000,000 tracker mortgages in the UK and the worry is that those mortgage holders may now chose to follow the West Bromwich and hike their rates as well.
In my opinion this was a bad day for justice and borrowers but a good day for Lenders and their shareholders.