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Lenders rubbish prospect of legal action after West Brom ruling


Skipton and Manchester Building Society are defending raising interest rates on some of their mortgages amid claims the lenders’ behaviour could be challenged in court.

Earlier this week the Court of Appeal ruled that West Bromwich Building Society should not have raised tracker interest rates without a rise in Bank of England base rate.

Landlord group Property 118 brought the case, and is now raising money and eyeing similar cases against Skipton, Manchester and Bank of Ireland.

Skipton hiked its SVR on residential mortgages from 3.5 per cent to 4.95 per cent in 2010.

In 2012 Manchester raised tracker rates for some borrowers by up to 1.5 per cent.

Bank of Ireland raised rates on 13,500 base rate tracker mortgage customers in February 2013.

Property 118 initially aims to raise £60,000, and had already received donations totalling £14,400 by the end of last week, according to its crowdfunding website.

The website says: “When we have raised enough money we plan to take further action against the Bank of Ireland, Skipton Building Society and Manchester Building Society in respect of changes they made to their mortgage terms which we believe are unlawful.”

But Skipton defended its rate hike as being lawful and unavoidable. It says the findings of the West Brom case are not transferable.

Mortgage Strategy understands the board of Manchester share Skipton’s view. Bank of Ireland would not comment.

A Skipton statement says: “We note that the recent decision of the Court of Appeal in the Alexander v West Bromwich Mortgage Company Ltd case was very fact specific to the offer letter and terms and conditions of business used by that society at the relevant time and is not of any wider application.

“Skipton remains firmly of the opinion that under the terms and conditions of its mortgage offer it lawfully had the right to remove the standard variable rate (SVR) ceiling that applied until 1 March 2010 to the majority of its borrowers with SVR-linked accounts.

“The decision, taken over six years ago, to exercise the society’s right to remove the SVR ceiling was permissible because of the exceptional circumstances provision in its mortgage offer.”

Skipton says the historic low base rate qualifies as an ‘exceptional circumstance’ and allows the rate hike.



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  1. Skipton conveniently omit that they also said that the SVR increase would be reviewed later when market conditions improved. That review never happened, despite the societies large profits.

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