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‘What about trust?’: Brokers hit out at West Brom rate hike

Brokers have slammed West Bromwich Building Society after it announced thousands of its buy-to-let tracker customers would see their rates rise by 2 percentage points.

Today Mortgage Strategy reported that 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.”

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  • Angry Broker 26th September 2013 at 5:28 pm

    This is an absolute scandal. The people who thought up this money making scam must need their heads examining and the Director’s who have gone along with it are equally culpable. I cannot believe that the FCA will stand by and allow this to happen. The West Brom must be aware that everybody affected will be joining the class action against them, where if there is any such thing as justice they are certainly going to loose. The cost of this is going to be astanomical not to mention the terminal damage that it will do to the brand. I say to the Director’s of the West Brom think again before it’s too late because this is an issue that effects everybody with a tracker mortgage. Any body can support the class action just go http://www.property118.com/help-us-to-protect-your-tracker-margins/43709/ .

  • Robert Clayton 24th September 2013 at 3:18 pm

    The reason the West Bromwich was able to raise its rates is because it is hidden in the small print.
    The FCA frowns on this practice but it is unlikely that the building society will suffer any sanction.
    So why did they do it? For the same reason that a dog licks its b—–ks – because it can.

  • stu marshall 23rd September 2013 at 7:21 pm

    Quite simply, if West Brom BS are advertising the following as of today on their website, which authorities or regulators are actually going to make Banks and Financial Institutions start to behave and it is not even about ‘treating customers fairly’, lets get them to not treat customers with utter contempt to start with…??

    The following is the definition of a tracker mortgage that is provided by West Brom BS on their website today….

    “Tracker mortgages give you the certainty of knowing that the rate you pay will move in line with Bank Base Rates. We offer a choice of variable trackers, including flexible mortgages.”

    The above explanation is being advertised by West Brom BS today at http://www.westbrom.co.uk/westbrom/mortgages.category?id=26

  • Jason, M A 23rd September 2013 at 2:08 pm

    A sly trick by West Brom at a time when they are looking to come back into the intermediary market for both Residental and Buy To Let lending. One could be put off advising their products if their small print allows them to potentially back stab their customers at any time in the future that they feel ! Think on