A London-based solicitor firm, which has previously set up action groups against Bradford & Bingley and the Royal Bank of Scotland, is investigating the legality of a clause in Skipton Building Society’s mortgage contract that allowed the lender to hike its SVR to 4.95%.
It was revealed last month that Skipton was temporarily removing the ceiling on its SVR which promised borrowers that their revert rate would not go over 3% above the Bank of England base rate.
With effect from March 1 the building society is bringing in a new SVR at 4.95%, which the building society says is in response to “exceptional market conditions.”
Skipton has defined exceptional market conditions as where the base rate is less than or equal to 2.7%, or where the base rate minus the average savings rate is less than or equal to 2.5% for three months.
Leon Kaye Solicitors has published a statement on its website claiming that clauses such as these are in breach of the Unfair Contract Terms Act 1977.
The firm says that Skipton’s decision forces borrowers to pay early repayment charges, and pushes up mortgage payments for those borrowers who cannot remortgage.
The statement on Leon Kaye’s website says: “We are currently investigating the legality of Skipton’s decision to not honour the guaranteed rate and whether the downturn in the economy would warrant a trigger of the “exceptional circumstances” clause pursuant to the terms of the mortgage contracts.
“Furthermore we are investigating borrowers rights regarding these clauses under the Unfair Contract Terms Act 1977 with a view to establishing whether borrowers have a claim against Skipton.”
It is asking Skipton borrowers affected by the SVR decision to get in touch with the firm directly.