Three of the UK’s largest mortgage lenders are waiting to see if they will have to refund millions of pounds to borrowers, following a ruling by an adjudicator made to the Financial Ombudsman.
Halifax, HSBC and Nationwide were reported to the Ombudsman by borrowers earlier this year after it was revealed existing borrowers are being charged at a higher variable rate than new customers.
The complaints arose after the three lenders launched lower variable rates in spring, while keeping the higher variable rate for many of their existing customers. In their defence, the lenders have said existing customers often get a better deal than new customers because they have taken out capped or discount rate mortgages, and that customers are free to switch, or will be automatically switched at the end of the initial period.
Rob Skinner, media relations manager at HSBC, said: ‘In our view the borrowers have got an attractive discount and they are still paying less than if they transferred to the lower rate. We have already transferred every borrower who would be better off and in two years no-one will be on the old variable rate.’
However, both HSBC and Halifax have now had initial rulings go in favour of the borrowers. Both cases are currently under review and the results are expected by the end of October. The initial adjudication on the Nationwide case will not be known for several weeks.
Despite this, Mark Hemingway, press office manager at Halifax, maintains they have been acting in the best interests of their borrowers.
He said: ‘We think it is wrong to re-negotiate the loan halfway through. There would be some borrowers who would benefit, but they are getting a special deal and rates have been coming down. So they are getting a double benefit.’
l As a result of the adjudications, Cheltenham & Gloucester has temporarily ceased to offer a lower tier of variable interest rate products.