Earlier this year, thousands of borrowers were hit by Skipton Building Society’s decision to remove a ‘Base Rate plus 3%’ ceiling on their SVR, due to ‘exceptional circumstances’. Lawyers now claim that the removal of the guaranteed cap was ‘unfair’.
The law firm Leon Kaye has formed a Skipton Action Group to pursue claims for compensation and bring pressure to bear on the building society to restore the previous ceiling for mortgage borrowers.
Buy-to-let mortgage complaint
The complaint sent to the Office of Fair Trading (OFT) is understood to concern buy-to-let mortgage customers. Residential customers may be the subject of a future complaint.
Leon Kaye claim that Skipton’s action in removing the guaranteed cap was ‘unfair’ and in breach of the Consumer Contracts Regulations 1999. Neither Skipton Building Society or the OFT has yet commented on the complaint.
Standard variable rate mortgages
Although Skipton’s rate hike was widely reported, many building societies have increased their standard variable rate (SVR) for borrowers since the Bank of England cut the Base Rate to 0.5% in March 2009. It has remained at an all-time low ever since.
Borrowers with a variable rate mortgage see their repayments rise and fall whenever lenders decide to vary interest rates. Conversely, those on fixed-rate mortgages are guarded against such uncertainty although they may face higher rates when they seek to re-fix at the end of the guaranteed period.
Ironically, Skipton’s current SVR is still very competitive at 4.95%. Some lenders charge 5.95% or more.
If you’re on the hunt for a better mortgage rate, the Which? Mortgage Finder could prove useful. It allows you to check the current rates on offer from a full range of providers, comparing the total cost of mortgages and helping you to find the best deal overall.
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