Can they do this ? Mortgage interest hike

[PhilTheFragger]

Yes the initial mortgage amount is calculated on the achievable rent , but all this talk of rents going through the roof is hogwash (apart from London area), Our BTL property is a 2 bed flat in Sheffield, rent has stayed the same for the last 5 years, Id like to be able to put it up, but if I am charging more than other landlords, the people are going to jump ship, leaving me with an empty pad.

Supply and demand still governs the market, down south where there are less available properties, rents have increased, but not in the real world.

anyway the thread was about the unethical raising of interest rates by Mortgage companies, not a mass debate about the rights and wrongs of the BTL market.

 

[Wolfman]

Yes the initial mortgage amount is calculated on the achievable rent , but all this talk of rents going through the roof is hogwash (apart from London area), Our BTL property is a 2 bed flat in Sheffield, rent has stayed the same for the last 5 years, Id like to be able to put it up, but if I am charging more than other landlords, the people are going to jump ship, leaving me with an empty pad.

Supply and demand still governs the market, down south where there are less available properties, rents have increased, but not in the real world.

anyway the thread was about the unethical raising of interest rates by Mortgage companies, not a mass debate about the rights and wrongs of the BTL market.

Not true, rents are seriously high in most towns now, in Suffolk a 4 bed house has a rental yield of £1500 to £2000 per month

The values of the properties have fallen, and the B T L mortgages are becoming available again and being used to buy and rent out normally at least 125% minimum of the monthly mortgage.

Its for this reason we are in the mess now since 2008 when it all fell apart

The system is broken regarding housing in this country, we have got it so wrong compared to other European countries

 

[SwingsitlikeHogan]

Yes the initial mortgage amount is calculated on the achievable rent , but all this talk of rents going through the roof is hogwash (apart from London area), Our BTL property is a 2 bed flat in Sheffield, rent has stayed the same for the last 5 years, Id like to be able to put it up, but if I am charging more than other landlords, the people are going to jump ship, leaving me with an empty pad.

Supply and demand still governs the market, down south where there are less available properties, rents have increased, but not in the real world.

anyway the thread was about the unethical raising of interest rates by Mortgage companies, not a mass debate about the rights and wrongs of the BTL market.

I'm not sure whether it's unethical behaviour to be honest. These days lenders have to make damn sure that borrowers understand the Ts&Cs of their borrowing. But as mentioned we are really not good at understanding and assessing risk associated with a financial product - especially when products being offered have very low and hence attactive interest rates.

The rates are low because they can be, and to attract us - and we really need to really understand the risks associated with what we are buying (into). If lenders get pulled up and penalised when they put their rates up as they can when low rate products have run their piece, then lenders won't offer low rates.

I've been knackered by the FSI in the past so have sympathy - but raisaed awareness of the mortgage business has been with us for 10yrs+ so we should all know by now to ask all the what-if questions before we enter into an agreement. And if we accept a risk then we have to live with that risk and be careful about what we accuse XY&Z of if that risk materialises - which probabilistically it can ALWAYS do.

Sorry if that sounds harsh - but it is how it is.

 

[ger147]

Of course it's unethical.

You sell a product that will track the central bank's interest rate, and when that central rate gets low and STAYS low, you decide your tracker product is no longer a tracker product as it's no longer profitable.

And the problem with asking what if questions are that lies were/are often the response. In your own example, I'm sure you were told as my own father was that there was NO CHANCE WHATSOEVER of his endowment not repaying his mortgage i.e. a probability of 0%. We all know now he was lied to as were many hundreds of thousands of others, hence why he got compensation.

 

[SwingsitlikeHogan]

Of course it's unethical.

You sell a product that will track the central bank's interest rate, and when that central rate gets low and STAYS low, you decide your tracker product is no longer a tracker product as it's no longer profitable.

And the problem with asking what if questions are that lies were/are often the response. In your own example, I'm sure you were told as my own father was that there was NO CHANCE WHATSOEVER of his endowment not repaying his mortgage i.e. a probability of 0%. We all know now he was lied to as were many hundreds of thousands of others, hence why he got compensation.

Unethical only if not clearly shown to the buyer as being a risk.

I think the bottom line truth is that for the majority of us actually buying a house requires financial risk taking that we are probably unequipped to assess properly - and most certainly most of us are either completely or unable to cope with the financial consequence of the risks materialising - interest rate hikes, property value crashes, negative equity, poorly performing endowments, job and income loss. The list goes on.

Renting may not seem a great option to many prospective home owners but which of the above risks to you carry you when renting - just the last I'd say. The thing about risk assessment and mitigation is that you decide what you don't want to happen and then chose your course accordingly - and in chosing that course you determine what risks you want to take. If you really don't understand or could cope with the risks associated with financial products then we shouldn't be taking the risks on. So we should rent.

But dear Mrs Thatcher's government decided that we should all aspire to OWN our own home. And so there we are. Piles upon piles of rental (council) property disappeared and became owned. And those who would have rented didn't complain too much as Maggie had told them that way way to go was buying. And so to today and we are in the mess we are in.

 

[ger147]

We have a buy to let mortgage with the West Brom Mortgage Company. . It's a base rate tracker set at 0.99% over base

We have the original offer letter which clearly states that after an initial 2 year fixed rate, (now finished) it reverts to .99% over base for the life of the mortgage.

Have now had a letter to say they are hiking the margin over base to 2.99%
Can they do this,

I would certainly complain as bitterly as you can about it. Without seeing the full T&C's I can't say whether it's allowed or not, although if I'd to bet I'm sure they can combine several of their more vague T&C's sections to claim that they can.

Good luck with your complaint.

 

[ger147]

Seems the OP is not alone...

http://www.telegraph.co.uk/finance/...ictims-of-tracker-rises-begin-fight-back.html

 

[ger147]

Unethical only if not clearly shown to the buyer as being a risk...

Still on the lender's website despite the impending rate increase...

Tracker mortgages have been sold on the understanding their rate simply tracks the Bank of England's Bank Rate. West Bromwich's website this week still described a tracker mortgage as a product that "gives you the certainty of knowing that the rate you pay will move in line with Bank base rates".

 

[SwingsitlikeHogan]

Still on the lender's website despite the impending rate increase...

Tracker mortgages have been sold on the understanding their rate simply tracks the Bank of England's Bank Rate. West Bromwich's website this week still described a tracker mortgage as a product that "gives you the certainty of knowing that the rate you pay will move in line with Bank base rates".

Which it will - however this statement doesn't exclude changes to your marginal rate on top of the base rate. But I absolutely get the point about the frustration and annoyance. Problem is that most of us are really not equipped to understand financial risk and impact - and put contingency plans in place. So we can read all the small print and listen carefully to what we are told about associated risk but if we WANT to do something and any impact of a risk happening seems something for way down the line - and 'unlikely' to happen anyway - and if it does we'll 'manage somehow' - well all our reading and listening can be a bit of a waste of time.

 

[ger147]

The statement on their website DOES exclude the marginal rate as the marginal rate is the only rate the lender sets. The BoE sets the base rate. The lender can't vary the central bank's base rate, only it's marginal rate and this product is being advertised as giving you CERTAINTY that the rate you pay will only change when the base rate changes i.e. a 0% probability that the marginal rate will be changed.

That is a lie by the lender, not a misunderstanding on the part of the customer.

 

[HomerJSimpson]

Living the dream and mortgage free but these type of base rate hikes almost under the radar se to worry me along with the threat of BoE rate increases, especially in the early days of our mortgage. They are no doubt relying on the fact that most will chuck the letter away as junk mail or fail to check it against the small print of the original deal.

 

[dturner451]

Go onto the Property118 site. It has started a Class Action against the West Brom. Legal opinion has already been sort and is looking very promising. If you have any questions on this many members will be willing to help you out

We have a buy to let mortgage with the West Brom Mortgage Company. . It's a base rate tracker set at 0.99% over base

We have the original offer letter which clearly states that after an initial 2 year fixed rate, (now finished) it reverts to .99% over base for the life of the mortgage.

Have now had a letter to say they are hiking the margin over base to 2.99%
Can they do this,

 

[Dido3]

Hi Phil,

I am not a golfer but I found your post while googling the West Bromwich Mortgage Company interest rate rise and wanted to make you aware of a Class Action Group that has been formed via a website called "property118.com".
Over 1000 people have registered so far, challenging the legality of the increase and over £50,000 has already been raised but we need to contact as many of the 6,700 affected BTL borrowers as possible so that they may join as soon as possible. Here is a link to the website:
http://www.property118.com/west-bromwich-building-society-mortgage-company-increase-tracker-margins-legal-action/43657/

Please do join us and let any of your colleagues/friends that are affected know.
Best wishes,
Di