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Buy to let mortgate rate hike deemed legal

The group of landlords initially brought theclaim against the West Bromwich Building Society in December 2013, after the building society increased their interest rates by nearly 2 per cent – affecting over 6,000 borrowers. Tracker mortgages are supposed to keep in step with the base rate, which has remained at a record low of 0.5 per cent for six years. (Although rates were expected to rise in the second half of 2015, at the moment the risk of deflation means there is no immediate appetite for change).
Despite the ongoing economic bloom at the time, the West Brom used a clause in its terms to increase rates to reflect what it called “market conditions”. It stated that the alternative to this would have been calling in the loans early. Man borrowers were caught out by the move, having taken out the mortgages on the express understanding that thy would always track the base rate and, as stated on the building society’s website, the borrower would not be surprised by the West Brom making such unilateral decisions. Instead, borrowers faced the prospect of their monthly payments sharply rising.
The judge, Mr Jusice Teare, agreed that the West Brom’s terms gave them latitude to raise interest rates on their tracker mortgage. “Everyone involved in this case is deeply shocked and disappointed by the ruling”, commented Emma Hughes, a professional landlord involved in the case. “We have seen our mortgage repayments double, we have spent savings to take the case to court, and now we face the prospect of having to pay for an appeal.”
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