The mutual has written to a quarter of its buy-to-let borrowers telling them rates on their mortgages will rise in accordance with terms and conditions in their contracts. In particular, it has referred to a clause stating the rate may be varied to reflect market conditions and ensure the business is carried out prudently, efficiently and competitively.
The news comes four months after the Bank of Ireland hiked rates for 13,500 tracker mortgage borrowers. Landlords have warned the action could be copied by other lenders.
Property 118 founder Mark Alexander, who is leading landlords in a class action against the Bank of Ireland rate rise, said: “The important thing now is to get everybody to fight one test case against the Bank of Ireland because it is clear other lenders are following suit.
“We need to fight and win one test case. Six months ago it was the Bank of Ireland, now it is West Brom – who will be next?”
Letting Focus founder David Lawrenson said other lenders would be watching the situation: “I have seen get out clauses in small print on other mortgages. It goes to show that borrowers should read the small print very carefully.”
The West Brom’s decision raised questions about the way mortgages were marketed on online comparison sites, he added: “If there are lots of get out clauses, should it be included under a lifetime tracker?”
Affected West Brom borrowers, who are all landlords with multiple properties, have until the end of March 2014 to repay or move their mortgage without facing exit fees. The mutual estimates the rate hike could generate up to £15m in extra revenue per year.
A West Brom spokesman said: “These changes, which are permitted under the terms and conditions of the accounts, are a reflection of market conditions and the need for us to carry out our business prudently, efficiently and competitively.”
