TSB did not breach the terms of its contract by charging mortgage prisoners a higher mortgage rate, a ruling from the High Court has declared.
In a court hearing that took place in July, law firm Harcus Parker representing mortgage prisoner claimants alleged that TSB and its subsidiary Whistletree had breached its contracts by charging interest rates based on what TSB describes as the Whilstletree SVR.
Instead, the claimants argued that mortgage prisoners should be charged on the TSB standard variable mortgage rate.
The ruling explained that, before 2008, Northern Rock offered a “Together mortgage”, a package consisting of a mortgage loan alongside an unsecured loan offered at the same interest rate, but with that rate being available on condition that the loan was kept in existence by the borrower.
By taking both loans, some borrowers were able to borrow more than the assessed value of the property that was mortgaged.
However, after an introductory period, the fixed rate would move up to a higher floating rate, the Standard Variable Rate.
When TSB acquired a portfolio of Northern Rock mortgages in 2016 under its Whistletree brand, the SVR it applied to the mortgages was 4.79 per cent which was 4.29 per cent above the Bank of England’s base rate at the time.
Since then, TSB has changed this variable rate from time to time, both up and down and, in each case, consistently with changes to the bank’s base rate.
The ruling explained that the Whistletree’s SVR should be regarded as the continuation of the original SVR originally operated by Northern Rock, and not a new rate.
Therefore, the High Court ruled that TSB had not breached the express terms of the claimants’ mortgage contracts.
In response, UK Mortgage Prisoners urged its members and claimants not to be “unduly disheartened” by the result, pointing out this was a judgement on three preliminary questions and not the trail of the group claim against TSB/Whistletree.
“This is by no means the end of legal action and there are still very significant broader issues beyond these preliminary questions yet to be determined at a full hearing which will hopefully take place as early as possible,” the group argued.
UK Mortgage Prisoners added that it will be meeting with the Treasury on October 1 to discuss what solutions the new Labour government will introduce in relation to residential mortgage reform, urgent legislation and regulatory intervention.
Lead campaigner Rachel Neale said: “We will not rest until action is taken by government and regulator”.
tom.dunstan@ft.com
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