Home owners across the country are being encouraged to seek mortgage compensation following a landmark case brought against the Halifax.
It concerned a Mr and Mrs Wright who were aggrieved when they discovered the Halifax was charging some borrowers a new lower standard variable rate. Wanting to save money, the couple asked to be transferred to the new rate. The Halifax said this would not be possible because they were tied into a special deal.
The Financial Ombudsman disagreed and the Wrights have been awarded compensation.
The watchdog has stated that it does not have a problem with dual rates in theory. What it objects to is confusion and so in such cases it will always rule in favour of the consumer.
So lenders charging dual rates can now expect to be inundated with claims from angry and confused borrowers, with estimates suggesting that up to a million are eligible for compensation.
But is this really the victory the consumer lobby claims it is?
Already the Halifax has had to raise its SVR from 5% to 5.75% and if more lenders are affected they are bound to follow suit. The only outcome will be higher rates for both new borrowers and those remortgaging, as it will be much more difficult for lenders to pass on special deals ‘ hardly good news for consumers, especially first-time buyers.
Press critics have neglected the fact that by introducing a new lower SVR the lender in question was trying to offer better value to the mass of borrowers stuck on the higher SVRs not tied to special deals.
While they may not be able to apply this deal to all their back book, it is a start. Any move to offer better value to so many borrowers has to be welcomed.
Mortgages are like any other retail product ‘ borrowers must accept that prices can change by the day. Nine times out of 10 there will always be a better deal around the corner.