West Bromwich Building Society customers are expecting refunds after last week’s court ruling
Borrowers whose monthly payments doubled when their lender increased the rate on their tracker mortgages are hoping a Court of Appeal ruling might allow them to claim back thousands of pounds.
About 6,000 West Bromwich Building Society customers are expecting refunds after last week’s ruling that the lender was not justified in changing the rates for buy-to-let landlords on tracker mortgages.
In December 2013 the lender increased the rates, despite the fact that the Bank of England’s leading Bank Rate, which tracker mortgages are typically expected to follow, had not changed at all.
This doubled monthly repayments for many customers. After a long legal battle, judges in the Court of Appeal found against the lender in a case brought by campaigner Mark Alexander.
These borrowers will now receive a refund and be returned to the lower rate. The lender is expected to pay out £27.5m.
But West Brom was not the only lender to increase rates for its tracker borrowers, and Mr Alexander, founder of website Property118.com, plans to target those that similarly increased rates for their borrowers.
Thousands of customers of the Bank of Ireland, which provides mortgages sold by the Post Office, and Skipton and Manchester building societies were also affected when those lenders increased rates on their tracker or mortgages or other loans subject to rate caps.
In March 2013 the Bank of Ireland increased mortgage rates for around 13,500 of its customers on tracker deals. Just over half were buy-to-let landlords, the rest ordinary home owners.
Some borrowers have been told by the Financial Ombudsman Service that, following the West Brom ruling, it may reconsider complaints made against the Bank of Ireland. The ombudsman found in favour of the lender in all previous complaints.
A spokesman for the Bank of Ireland said: “We note the judgment.
“However, the West Bromwich case is not comparable to Bank of Ireland UK. Bank of Ireland’s offer document and mortgage terms and conditions expressly stipulated that the tracking margin or differential could be varied, and the offer and mortgage conditions documents are consistent, allowing for the differential to be lawfully changed.”