Bank of Ireland Mortgage Move Destroys Trust
David Lawrenson of www.LettingFocus.com says the move to hike rates on some Bristol and West Tracker Mortgages looks wrong – and destroys confidence in all lenders.
When I speak to people who want to sell services to private landlords (which includes organisations like local authorities and housing associations that desperately need private rented sector landlords to make their houses available to people who have few housing options) the suppliers sometimes ask me “What do private landlords really want from us, the suppliers to the sector”
Well, two things always come to mind.
Communicate What You Offer
First, private landlords need to know what products and services are out there – what do you, the supplier offer? In the case of local authorities, most landlords do not know what the councils can offer them because most have failed to adopt a proper marketing programme online to tell them.
Second, they want fairness in the products and services that are being sold. They do not want to feel they have been misled or confused, whether deliberately by a supplier, or because of poor communication.
Bank of Ireland (BOI) is a good case study of the latter. Private landlords who took out Bristol and West Bank of England base rate tracker mortgage products thought they were getting a base tracker for life.
But alas, it seems there was a clause in the small print that allowed BOI to significantly up the rate in the event of special circumstances (e.g. in the general economy) applying. They have now applied this clause.
Much discussion is now taking place about whether they can do this – including whether doing so is a breach of Unfair Consumer Contract Terms rules and whether it is allowable if such an important clause was not clearly bought to the attention of landlords when they signed up for these mortgages. (Landlords, or at least, most of them are still consumers who are taxed like consumers, and who already won a similar case when Lord Justice Mann ruled in the high court against Foxtons and the unfairness of their repeat letting fees which were hidden in small print).
A class action to fight BOIs move has been launched – check online for details.
I guess BOI will have consulted its lawyers about whether their move would stand up in court and they would have been encouraged that another lender, Skipton got away with a similar kind of move some years ago.
However, whatever the outcome, it reeks of unfairness and private landlords and those brokers who advise them will not easily forget this.
In the short term, all landlords should now carefully check the small print in their mortgage terms for both current and future mortgages.
I have always opted for Bank of England base rate trackers, and so have most of my associates. A quick check of the T&Cs in these reveals that, for our loans at least, The Woolwich, C&G, BM Solutions, Mortgage Express and Bank of China, are all stuck with continuing to lend to us on low Bank of England Tracker rates. They have no wriggle room at all and no special clauses to invoke. Thank goodness for that.
Nevertheless, this move by BOI lessens trust in all mortgage lenders at a time when trust in financial services organisations is very low – something that the Council of Mortgage Lenders ought to be concerned about.
Finally, there was not much in the budget today except for “Help to Buy” and a new mortgage guarantee that will help some people get onto the housing ladder or move up on it, but will likely just push up house prices even more. Sadly, apart from this, there was nothing much new on unlocking housing supply.
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