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B&B accused of raising rates to influence votes

IFAs claim Bradford & Bingley put up its rates before its conversion vote to convince borrowers that taking a windfall was more attractive than remaining a mutual.

Over the past year, variable mortgage rates at B&B have risen to 7.64 per cent from 6.6 per cent. This places B&B above mutual building societies and slightly below plcs such as the Halifax.

IFAs claim that, following the rise in rates to 7.64 per cent, a borrower with a £100,000 loan stood to gain only £100 a year over what they would have paid if their mortgage was with a plc.

But if B&B converted, they could get a windfall of £500. IFAs claim this might have influenced borrowers to vote for conversion.

However, if B&B kept its rates in line with other mutuals, for example, Nationwide&#39s 7.29 per cent, borrowers could see a big saving of £450 a year compared with a plc&#39s rates, which would be more attractive than a one-off windfall.

London & Country senior manager Patrick Bunton says: “B&B raised its rates to make sure borrowers voted for conversion. If B&B had kept rates nearer to those of a mutual and borrowers could see the windfalls were not worth the savings, it would have made conversion seem less attractive.”

B&B senior press officer James Evans says: “Our savings and mortgage rates did go up before the vote. We put them up in anticipation of having to pay dividends to shareholders and told members what we were doing before they voted.”

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