West Bromwich Raises Interest Rates for Buy-to-let Mortgage Borrowers

This article by Rupert Jones of theguardian on September 23th, 2013 states that borrowers with tracker mortgages will see their rate rise by two percentage points.

Thousands of customers holding buy-to-let mortgages with West Bromwich building society will see their monthly costs rise sharply after the terms of their deals were changed.

Angry borrowers are already pledging to fight the move after it emerged that about 6,700 customers will be hit by the society's decision to increase their interest rates by two percentage points on 1 December. This is despite the fact that the Bank of England base rate, which these mortgage deals track, has been at 0.5% since March 2009 and seems unlikely to rise for at least two years.

Some of those affected – for example, those currently paying a rate of 1.49% – will see their mortgage rate more than double at a stroke.

The change follows a similar move earlier this year involving 13,500 Bank of Ireland UK customers, which prompted an outcry and later led to the bank cutting the numbers of people affected.

The West Bromwich said the 6,700 borrowers were all BTL landlords with mortgages that track the base rate. The affected customers took out their deals from early 2006 onwards and are on a variety of different interest rates. They all signed up with the West Bromwich Mortgage Company, a division of the building society.

A spokesman for the society said: "The West Bromwich has advised a number of BTL borrowers who have tracker mortgage accounts with the West Bromwich Mortgage Company that their rates of interest will be increasing by 2% from 1 December 2013. All borrowers affected are landlords of multiple property portfolios.

"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."

Customers have already started to post comments on websites. On the Property118 website Gavin Ewan said: "I will be phoning them on Monday to complain, as there is nothing in my acceptance of offer suggesting that they can increase it. Basically it is a tracker BOE [Bank of England] base rate +0.99%, ie 1.49% until the term end (25 years from November 2006)."
He added: "I expect there are going to be a lot of very unhappy people."

Another, Shaun McAllister, said: "I shall be fighting them all the way."

In February 2013, Bank of Ireland prompted fury after revealing it was triggering a "special condition" clause in loan agreements that allowed it to increase the "interest rate differential" on some of its UK base rate tracker mortgages.

The changes would have affected about 13,500 residential and BTL customers. However, in May the bank wrote to 1,200 of the borrowers to advise them they would not face the rise in payments after all, following a review of customer complaints.

Article Source: http://www.theguardian.com/money/2013/sep/23/west-bromwich-interest-rates-buy-to-let-mortgage