FINANCIAL HEALTH WARNING: Read This Now If You Have A Base Rate Tracker Mortgage

FINANCIAL HEALTH WARNING: Read This Now If You Have A Base Rate Tracker Mortgage

Most people know that a Base Rate Tracker Mortgage tracks the Bank Base rate. It can only go up or down when the Bank of England change the base rate. Can’t it?

Well, that’s what everyone thought. Of course, when the Banks were throwing money around and offering self-certification tracker mortgages pre “credit crunch”, they never thought that base rate would drop  to just 0.5%! It’s now been at that level for 5 years and they’re fed up that these loans are nowhere near as profitable as they expected them to be.

But there’s nothing they can do to change the rate on a Base Rate Tracker mortgage. Is there?

Well, actually, yes there is. They can find some vague reference to rate changes in the small print of their terms and conditions and try and justify an increase in their margin on these loans.

Bank of Ireland and West Bromwich Mortgage Company have both done this in the last 12 months – see more here. They’re working on the assumption that individual borrowers won’t have the appetite, or the funds, to challenge what is clearly an illegal act. Yet another case of the Banks exploiting their “customers” (PPI, Libor manipulation, etc spring to mind?).

However, they’re mistaken in their assumption. We live in the information age where like-minded people can communicate easily via social media and internet forums. A group of 250 or so affected by the West Bromwich increase are about to commence a class action against them, led by Mark Alexander of Property118. £250,000 is being raised to fund this and a barrister has been appointed.

There seems little doubt that West Bromwich Mortgage Company will either reverse the increase, or, if they are stupid enough to go to court, lose the case, with significant damage to their bottom line and reputation.


If you have a Base Rate Tracker mortgage with any Lender, be in no doubt that if Bank of Ireland and West Bromwich get away with this, the other Banks will follow.

West Bromwich profits will increase by £19 million a year for the balance of these mortgage terms (an average of about 15 years). That’s £285 million. They’re targeting 6,700 Buy-to-Let mortgages. By the way, Bank of Ireland have targeted Residential mortgages to so it isn’t just be those nasty landlords who suffer!

Think about how much extra profit there would be for one of the big Banks with hundreds of thousands of mortgages. Still think they won’t do it if they think they’ll get away with it?

If you have a tracker mortgage, it’s a good idea to keep up to date with developments on Property118. You might even want to contribute the fighting fund. One nice gentleman has just made a contribution of £15,000.

By Richard Watters

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Warning! Do You Have A Base Rate Tracker Mortgage? Read This NOW.
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