Lifetime Tracker rate hike - Is it legal ?

stoviepot

I have had a lifetime tracker buy to let mortgage since 2006 and when I signed up for it the agreed rate was Bank of England base rate + 0.99%. At that time it was 4.5% + 0.99% = 5.49%. I healthy rate I'm sure you'd agree !!

Since then they're moved in up a few times and down lots of times each time in line with the Bank of England Base Rate changes. Its been at 1.49% since the base rate hit 0.5% a few years ago.

Today I received a letter stating they are changing the offset rate from 0.99% to 2.99% based on a T&C "to reflect market conditions" and "to make sure our business is carried out prudently".
The rate I pay will change from 1.49% to 3.49%.

A 134% INCREASE !!!

Can they REALLY do this ?

Even if the T&C back this up, its TOTALLY unfair as it allows them to do ANYTHING with the rate. So I may take out a loan and deem I'm safe to keep that loan knowing that the base rate is the only variable risk but I know have to consider they might change the rate at ANY TIME and by ANY AMOUNT.

What rights do I have ?

I will be issuing a complaint then taking it to the Financial Ombudsman Service if not happy with the result.

Banks really don't give a sh*t. :mad:

kingstreet

I think you wanted this;-

https://forums.moneysavingexpert.com/discussion/4470099

holly_hobby

They can do this under the exceptional circumstance rule, which basically is triggered in order to keep the business solvent and trading, by essentially generating profit from their mge book.

In fact there was a huge recent hoo har over BOI implementing a similar change, and other lenders have too had to make changes under the EC heading.

FOS have no power over product pricing or whether a lender can implement a EC amendment.

Options ? Legally there are none (exceptional circs. rule will be in the small print of your t&cs).

You could however change lender, if you aren't happy with the rate or lenders actions - but be careful its because you can obtain a more attractive deal that benefits you, rather than it be driven by anger or spite.

Sorry, I know this won't be what you want to hear.

Hope this helps anyway

Holly x

Thrugelmir

stoviepot wrote: »

Even if the T&C back this up, its TOTALLY unfair as it allows them to do ANYTHING with the rate.

Unfair maybe. However you signed the T&C's in accepting the mortgage offer. So legally the lender is within their rights.