Now I’m worried Birmingham Midshires will raise their Tracker margins

Now I’m worried Birmingham Midshires will raise their Tracker margins

16:40 PM, 7th October 2013, About 8 years ago 17

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I’ve been following the news on this site concerning West Bromwich Building Society’s increase in Tracker margins and the Class Action. I thought I would check through our ‘Lifetime Tracker’ mortgage offer from Birmingham Midshires. I was in for a shock.

We’ve loved our trackers from Birmingham Midshires (BM) and have been enjoying rates less than 0.5% above the Bank of England Base Rate, which the ‘Illustration’ document reported would last ‘For Term’. Of course, we paid a handsome arrangement fee to secure the rate. The tracker margin seemed unchangeable, but West Bromwich Building Society’s move to increase their tracker rates suggests that anything is possible. Birmingham Midshires BM Solutions

The mortgage offer from BM in October 2006 does say “The mortgage will be charged interest at: a variable rate which is 0.4% above the Bank of England Base rate, currently 4.75%, for the term of the loan..” The accompanying Special Conditions do not seem to mention interest rates. It was the Standard Offer of Advance Conditions (2004) that contained the shock. Under the section ‘Interest’ it states that

“Unless you have a fixed rate mortgage …… we may change the interest rate payable on your loan at any time for any of the following reasons:
(1) to reflect changes in market conditions outside our control
(2) to reflect changes in the cost to us of raising the money we lend to customers:
(3) to reflect changes in general lending practice by other major lenders (including the terms on which mortgages are offered by them);
(4) to maintain or improve the general market position of our products in all areas of our business;
(5) ……….”

So BM can change the interest rate almost at their whim? In particular reason (3) is scary if West Bromwich and the Bank of Ireland get away with changing their tracker margins to BTL customers.

The text seems strange to me to describe their freedom to change a tracker margin. It seems to be the considerations for changing a traditional Standard Variable Rate of a mortgage. If it related to a Tracker margin I would expect phrases like ‘exceptional circumstances’ to be used. Also why does it refer to the interest rate rather than the more relevant tracker margin? The obvious reason to change the actual interest rate is to track a BoE base rate change, but this is not included. Why?

(The accompanying General Mortgage Conditions 2004 booklet merely refers to the ‘offer document’ on changing interest rate.)

A further confusion arises because there is no text that I could find which explains which of the various documents take precedence. The odious Standard Offer of Advance Conditions started with the instruction to “read them in conjunction with ..” the other documents and then the statement “Together these form the offer letter ..”.

Other Property118 posts suggest that West Bromwich had an even more messy set of documentation for the tracker offers which are now being changed. For example, they didn’t refer to their special conditions booklet, which BM got right in my case.

So I’d guess BM are waiting and watching on the outcome of the West Bromwich’s move.

Are you worried as well? I have contributed to the funding of the Class Action campaign despite not having any West Bromwich or Bank of Ireland mortgages.


by HB Welcome

22:21 PM, 7th October 2013, About 8 years ago

Sorry to be negative but this just seems like a fluff piece for the class action.

BM are an active major player and won't be trying it on unless they are seriously in trouble.

I don't post on PT very much as it is a bit too Happy-Clappy for me but Vanessa is right in what she says.

Bank of Ireland etc must be loving a bit of in-fighting.

by Mark Alexander

22:28 PM, 7th October 2013, About 8 years ago

Reply to the comment left by "Matthew James" at "07/10/2013 - 21:17":

I may well have been that financial adviser Matthew!

Your understanding of tracker rate products was the same as mine and every other adviser or borrower I suspect.

I dont think the lenders realised until now they had this small print or that it could be used in the way it is now. If they had known, don't you think the margins would have increased a few years ago?

I also suspect all lenders will continue to have lawyers pouring over their T&C's looking for various opportunities to try it on, especially if landlords don't unite and fight back.

With over 1 million landlords in the UK we could become a formidable army if we could unite but sadly most are so disconnected or selfish it doesn't happen and that's why we keep all getting walked over by bullies.

by Vanessa Warwick

10:07 AM, 8th October 2013, About 8 years ago

@HB Welcome

Property Tribes "happy clappy"?! Crikey, I've never heard that one before. We just try and advocate best practice and support landlords in creating a sustainable and profitable business with the wellbeing of their tenant at the heart of that ... because without tenants, none of us have a business.


It's a massive assumption that most landlords are disconnected or selfish.

If this was a "puff piece" for the class action, then why not admit that from the start?

I feel a bit deceived that I answered in good faith, but, because my answer did not involve a rallying call, you now challenge me on what I am doing in my own business as if I am one of the people with "my head in the sand". People will do what they want to do. All any forum can do is help them as best they can by creating awareness ... and then be there for them when they need it.

I appreciate your frustration Mark - I experience it over people handing over large sums of money to gurus - but everyone has their own property journey to go on. As a forum leader you can only guide and support and be there for them when they need it.

by Mark Alexander

10:16 AM, 8th October 2013, About 8 years ago

Reply to the comment left by "Vanessa Warwick" at "08/10/2013 - 10:07":

Hi Vanessa

Of course it's a "puff piece" to an certain extent, but I didn't write it, Ed did and he is quite clearly expressing his genuine concerns which I just happen to agree with.

I don't see why you have taken my other comments so personally, I merely asked what you are doing and commented on the thousands of affected and unaffected people who appear to be doing nothing other than hoping they will not be next in line for the same treatment by their lenders.

by Vanessa Warwick

10:35 AM, 8th October 2013, About 8 years ago

Sorry Mark, I think you have misunderstood me. I never take anything personally. I couldn't survive on the web if I did!

by Matthew James

18:30 PM, 8th October 2013, About 8 years ago

I think all possible changes which could represent a disaster to your income need to be viewed seriously. I'm not that affected (yet) but I imagine there are many landlords that would be if there was a 2% hike across the board.

Even if people could manage the 2% hike, what's to stop this happening again? It's as much about the precedent that people can broadly describe a policy as something (a tracker) and then include a complete contradiction in the T&C's. It's like selling sugar free products and then having in the ingredients "If we think it tastes better, we may add sugar when we feel like".

I understand there are many time served financial folk that think this won't happen, but how many people could see the sub prime disaster which was going on, on a continental scale?

@Mark, as much as I agree with your idea that landlords should unite, financially, to fight this battle, I think there is a clear case for a class action to use existing powers to stop lenders selling contradictory products, and we should not need to fund something so obvious? (BTW, I'm a paying subscriber for P118, great site!)

by Colin Childs

23:42 PM, 6th November 2013, About 8 years ago

Birmingham Midshires is a subsidiary of Lloyds bank , well Bank of Scotland in fact to be pedantic. So one suspects will survive without having to resort to amending it's contractual terms. As in far better financial health than other mortgage lenders.

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