A West Norfolk home owner has gone to the High Court as part of a test case against a mortgage lender
Property investor Mark Robert Alexander bought a buy-to-let property with the help of the West Bromwich Building Society in July 2008.
He claims he did so secure in the belief that his tracker mortgage would follow the Bank of England base rate and not change otherwise.
However, in December 2013, the building society informed Mr Alexander - and more than 6,500 of its other customers - that they were adding two per cent to their tracker rate, even though the base rate had not moved from its current record low of 0.5%.
The society said the move was justified “in light of market conditions and in order to carry out its business prudently efficiently and competitively.”
Mr Alexander, 47, who lives near Lynn, and hundreds of other customers complained their tracker rates should be protected under the terms of their mortgage offers.
But the society claimed those “personalized” terms were trumped by their standard mortgage offer conditions which at that time, they claim, granted them the right to vary a tracker rate should they feel it necessary to do so, as if it were a standard variable rate.
Mr Alexander is among more than 350 West Bromwich customers who formed the Property 118 action group and have brought the case, which opened at the High Court n Wednesday.
Mark Smith, representing Mr Alexander and the rest of the group, told the court that the building society’s actions were unfair.
He also argued that the clauses in the mortgage contracts which were used to justify the rate hikes were “inconsistent” and could not be relied upon.
He said: “The personalized offer is plain and should be given preference.”
But Raymond Cox QC, for the West Bromwich, said: “The defendant’s right to vary the interest rate was repeatedly made clear in the documents sent to Mr Alexander.”
He said the society’s actions had been backed by the Financial Ombudsman Service and “it was not understood why” the action had been brought.
The court also heard the increase had since been reduced to 1.5 per cent.
The judge, Mr Justice Teare, reserved his judgement, which will be delivered at a later date.
Legal experts say the case could have implications for millions of homeowners across the country.