Brokers have slammed West Bromwich Building Society after it told thousands of its buy-to-let tracker customers their interest rates would shoot up by 2 per cent.
Earlier this week Mortgage Strategy reported around 6,700 borrowers who have tracker mortgages with West Bromwich Mortgage Company, its now closed specialist lending arm, would see their rates rise on 1 December.
The affected borrowers are on a variety of different rates but all will see their interest rates increase by 2 per cent.
West Brom blamed “market conditions” for the increase and said the change is allowed as part of the mortgage contract.
A spokesman for the building society says: “These changes, which are permitted under the terms and conditions of the accounts, are a reflection of market conditions and the need for us to carry out our business prudently, efficiently and competitively.”
West Brom’s move follows that of Bank of Ireland, which on 1 May increased its tracker mortgage rate for 13,500 borrowers. The rate rose from base rate plus 1.75 per cent to base rate plus 4.49 per cent for buy-to-let deals and base plus 2.49 per cent for residential, rising to base plus 3.99 per cent for residential customers on 1 October.
However, in late May Bank of Ireland reversed its hike for 1,000 flexible accounts customers and 200 more who had switched to a tracker mortgage.
Brokers have criticised West Brom’s decision and believe it will damage the reputation of lenders.
Coreco director Andrew Montlake says: “This is another disappointing move from a lender which, like the Bank of Ireland’s ongoing changes, will serve to further infuriate Buy To let landlords who felt secure on a specific product.
“It does nothing to improve the trustworthiness of lenders and shows that lenders have the power to do what they want, when they want, often at the expense of their customers best interests.”
Trinity Financial product and communications manager Aaron Strutt says: “It doesn’t help consumers’ trust in banks and building societies. If you are sitting on a long-term tracker rate and you can fix in then it is potentially worth the risk, especially if you are with one of the smaller lenders, which could be more at risk of doing this sort of thing.
“I am not sure I would be applying to the West Brom Building Society for a mortgage when it is hiking rates by 2 per cent.”