West Brom was ordered to repay £27.5m to affected borrowers by a Court of Appeal judgement today after it raised tracker interest rates in 2013 without a corresponding increase in the Bank of England base rate.
Skipton Building Society and the Bank of Ireland have been urged to pay back borrowers affected by hikes in tracker rate mortgages after today’s West Brom Building Society ruling.
West Brom was ordered to repay £27.5m to affected borrowers in a Court of Appeal judgement this morning. The society, through West Bromwich Mortgage Company (now defunct) raised tracker interest rates in 2013 without a corresponding increase in the Bank of England base rate.
David Lawrenson, founder of property consultancy LettingFocus, said: “Landlords will now wish to take on the Skipton and the Bank of Ireland who have in the past got away with similar hikes.
“These lenders should perhaps now do the honourable thing and pay back borrowers similarly affected by their own interpretation of clauses in the small print of their mortgages.
“But if they don’t, I am sure they will soon face a legal challenge too.”
Lawrenson also slammed the regulators for driving affected borrowers to go through a lengthy court battle.
He added: “West Brom's loss puts the Financial Ombudsman Service and the Financial Conduct Authority in a very bad light indeed.
“They failed to help affected borrowers, leaving to them to have to go through an arduous court process – indeed all the way to the Court of Appeal to get justice.
“For all mortgage lenders, they will now realise that they cannot renege on validly and fairly entered into contract terms.
“I hope the Council of Mortgage Lenders is also watching.”
The appeal from landlord group Property 118 overturned an earlier High Court judgment that sided with West Brom.
It was led by former mortgage broker Mark Alexander after he raised £500,000 from 400 landlords.
A statement from West Brom Building Society said: “While we are disappointed, we accept the Court of Appeal’s decision and so will be contacting all affected borrowers, including those who were not part of this action, to advise them of the outcome and that we will be reimbursing them any additional interest charged.
“Other saving or borrowing members do not need to take any action as a result of this news.
“The one-off cost of this will be approximately £27.5m.”
The Bank of Ireland, Skipton Building Society and the Council of Mortgage Lenders have declined to comment.