MSE News: Buy-to-let borrowers hit by West Brom mortgage hike

Phil_Spencer

On the bright side, this could free up some properties for first time buyers.

owitemisermusa

Hmm...

My take home message from all this is simple, fixed rate for any sort of commercial mortgage/loan.

owitemisermusa

Just a thought, what's to stop ANY lender doing this regardless of whether it's a residential or BTL mortgage product?

I wonder if trackers are now doomed for all concerned.

Leon_W

Bad news for consumers.


You think you're buying a tracker/fixed/variable rate but you're not. Hidden in all contracts from this day forward will be the "changing market conditions" clause that will mean they can do anything they like in effect.

brit1234

Leon_W wrote: »

Bad news for consumers.


You think you're buying a tracker/fixed/variable rate but you're not. Hidden in all contracts from this day forward will be the "changing market conditions" clause that will mean they can do anything they like in effect.

I don't see it as bad news, in fact it is great news. It protects the building society and its members, surely that is most important. The drastic cut in interest rates was meant to be a short term emergency matter but instead has gone on for over 5 years putting the institution at risk. Never in financial history has this happened in interest rates. The bank had emergency measures in the contract to protect itself which it invoked.

Even with the rate increase the landlords were on a cheaper than before the financial crash, if they didn't like it they could move.

How many of the litigation landlords passed on the interest rate cut onto
their tennants in lower rents. I bet none, this story is all about selfish greed where landlords were suckered out of more cash by the website property118.

ChumpusRex

owitemisermusa wrote: »

Just a thought, what's to stop ANY lender doing this regardless of whether it's a residential or BTL mortgage product?

I wonder if trackers are now doomed for all concerned.

For residential, this may be protected against by the "unfair terms in consumer contracts regulations 1999" - which prevents businesses slipping terms in the small print that give them permission to do anything they like - the specific regulation is any term which "causes significant imbalance in the parties' rights and obligations".

However, no such protection exists for businesses - if a business is entering a contract, it is expected to read and understand all of the small print, seeking expert advise if necessary, and if they don't like it, either renegotiate the T&C or go somewhere else.

[Edit - remove some stuff which was wrong - also add link to judgment]

You can find a copy of the judgment at:
Bailii.org

Thrugelmir

owitemisermusa wrote: »

Just a thought, what's to stop ANY lender doing this regardless of whether it's a residential or BTL mortgage product?

.

Other lenders did so a long time before the West Brom BS.

owitemisermusa

Thrugelmir wrote: »

Other lenders did so a long time before the West Brom BS.

Really? Changed the documented BoE + X tracker rate? I missed that. How come there was no outcry?

I've read the arguments re: economic factors prompting urgent need for cash for the bank but I wonder if we as consumers could cite the downturn in the economy and cashflow problems as a reason to unilaterally lower the rate we are contractually obliged to pay.

Maybe the BTL lending sector needs to be regulated like the residential one.

Anyway, not an economist or financial expert so will silently watch how things unfold and hopefully learn.

Thrugelmir

owitemisermusa wrote: »

Really? Changed the documented BoE + X tracker rate? I missed that. How come there was no outcry?

Never gained enough traction.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/7291277/Skipton-faces-legal-challenge-over-rate-rise.html

If you can read Company accounts. Very easy to understand why Skipton felt it had too. Simply couldn't absorb the financial pressure. As a mutual organisation has no ability to raise capital reserves.

magpiecottage

Looks like West Brom lost in extra time.

Now for the penalties!