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MPs condemn lenders over mortgage tracker rate hikes

Cross-party MPs have condemned the Bank of Ireland and West Bromwich Building Society for using controversial contract clauses to increase their tracker rate mortgages.

In an early day motion, launched by Conservative MP David Morris, the group calls on the Government to investigate the controversial terms in mortgage contracts.

The EDM has seven signatures including Labour, Conservative and Liberal Democrat MPs. It accuses lenders of boosting profit margins where consumer protection law is “ambiguous”.

Last May, the Bank of Ireland increased buy-to-let tracker rates from 1.75 per cent above base rate to 4.49 per cent above base. Residential borrowers also saw rates rise in two stages, firstly to 2.49 per cent in May and then to 3.99 per cent in October.

In December West Brom increased rates for 6,700 of its buy-to-let tracker customers by 2 per cent.

Both sets have borrowers have launched legal challenges to the increases as part of a campaign led by property118.com.

The West Brom campaign has more than 400 borrowers signed up and is pushing for a court showdown.

The Bank of Ireland campaign has stalled as it struggles to raise money and sign up members but hopes to raise enough finance to carry on.

The FCA has signalled it may look to crack down on similar clauses within mortgage contracts which allow lenders to push through rate hikes despite base rate remaining at a record low.

The EDM states: “This House condemns mortgage lenders breaching tracker rate mortgage contracts by unilaterally increasing the margin they charge over the Bank of England base rate in order to increase their profit margins and deliberately targeting borrowers where consumer protection law is ambiguous.

“It calls on the Government to investigate the alleged associated recent activities of the Bank of Ireland and West Bromwich Building Society.”

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  1. Not that i agree with the increases in the rates, but really the same people who are hiding behind the fact they are going to get an 11% pay increase because they didn’t set this rate are suggesting other people should not use Terms and Conditions of a contract?

    The day politicians stop having double standards and actually do a proper days work i will have more respect for them, but until then they should stop pointing the fingers and get on with claiming their expenses!

    However it the FCA are going to have a look at contracts, why (as usual) are they going to be only looking at the contracts that hit the newspaper headlines? Has anyone else had their provider contract ripped up in respect of GPP schemes fees and commission? Oh, yes that only affects IFA’s so the FCA wont be interested in that!

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