Mortgages  

High Court backs West Brom over rate hikes

High Court backs West Brom over rate hikes

Buy-to-let landlords fighting a sharp increase in the cost of their tracker mortgages have lost their High Court battle against West Bromwich Building Society, which was ruled to be was within its rights to hike rates by 2 per cent as a result of “changing market conditions”.

Landlords were taking legal action against the building society over a 2 per cent hike in their tracker rates.

The case stems from September 2013, when the lender told those with multiple property portfolios that their buy-to-let rates with the now closed specialist lending arm West Bromwich Mortgage Company would be increased from 1.49 per cent to 3.49 per cent from 1 December.

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The subsequent legal action attracted more than 400 individuals who believed the decision breached their contractual rights. Over £500,000 was raised to cover legal costs, with each claimant paying £1,144 to back the case.

A spokesperson for West Bromwich told FTAdviser: “We have always maintained that we acted entirely within the terms and conditions of these buy to let mortgages and the court’s ruling wholly justifies our position.

“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.

“We have approached this in a fair manner, passing on any improvements in market conditions by reducing the additional percentage borrowers have to pay.”

Almost two years ago, the Bank of Ireland was forced into a partial U-turn on a similar rate rise, stating that it no longer demanded higher interest rate payments on 1,200 customers’ mortgages. Some 12,300 customers would still have to pay the increased rate.

The bank had written to 13,500 mortgage customers telling them their base rate tracking mortgage would increase from Bank of England base rate plus 1.75 per cent, to plus 4.49 per cent.

donia.o’loughlin@ft.com