West Bromwich Building Society in court over rate hike

The long-awaited court case over increased tracker rates by the West Bromwich Building Society began in January.

The lender is accused of illegally ramping up rates for about 6,200 buy-to-let customers.

In December 2013 the West Bromwich upped rates by two percentage points on some tracker mortgage deals aimed at landlords despite no change in the Bank of England base rate.

Customers were told their rate had been hiked because of ‘market conditions’ and to ensure it was running its business ‘prudently efficiently and competitively’.

Property investor Mark Alexander took the case to the High Court on behalf of 350 other disgruntled landlords.

Alexander said their tracker rates should be protected under the terms of their mortgage agreement while the West Bromwich claimed it was able to override these terms if it was deemed necessary.

Barrister from Cotswold Barristers Mark Smith, representing the landlords, told Mr Justice Teare that the building society’s actions were unfair and that the clauses in the mortgage contracts used to justify the rate hikes are ‘inconsistent’.

The West Bromwich claimed it had only used its discretion to vary the tracker rate for customers who own a portfolio of three or more buy-to-let properties.

If the West Bromwich win the case it could give the lender, and others, the go-ahead to up rates on other tracker mortgages for both landlords and owner-occupiers.

After the hearing Alexander tweeted that the judge had been “tough on both sides”. He described the case as a “cliff-hanger” but added that “consensus amongst attendees was that our closing arguments were stronger.”

At the time of going to press, the outcome was awaited.