Three-year wait for a mort­gage de­ci­sion

The Daily Telegraph - Your Money - - YOUR MONEY -

This bor­rower has been de­nied an ex­pla­na­tion for be­ing made a ‘mort­gage pris­oner’ by his bank, says Olivia Rudgard

Banks are still forc­ing mort­gage bor­row­ers to pay ex­pen­sive rates be­cause of “af­ford­abil­ity” rules – even af­ter the om­buds­man ruled that one bor­rower had been un­fairly “pun­ished” by his bank.

Mort­gage bor­row­ers trapped on high rates have been given some hope re­cently, with an om­buds­man rul­ing in their favour.

But banks are still re­fus­ing to switch their bor­row­ers to cheaper deals – and bor­row­ers who are be­ing switched now are be­ing de­nied com­pen­sa­tion for the years they spent on more ex­pen­sive loans.

One bor­rower has been wait­ing for the om­buds­man to rule on his case for three years – and has now been told that it is not look­ing into the is­sue at all.

Chris Camp­bell, 35, was re­peat­edly told by his lender, San­tander, that there were no deals for him to switch to when his fixed rate ex­pired in 2011.

He was forced on to the stan­dard vari­able rate (SVR) and even­tu­ally fell into ar­rears on the loan. He com­plained to the om­buds­man in Novem­ber 2013.

He still doesn’t know why the bank re­fused to of­fer him a bet­ter rate and has now been told by the Fi­nan­cial Om­buds­man Ser­vice that it is no longer ex­am­in­ing this is­sue.

In a let­ter seen by Tele­graph Money, a man­ager at the om­buds­man ser­vice told him: “We dealt with your com­plaint that you were a ‘mort­gage rate pris­oner’ and that you were trapped on San­tander’s SVR. We is­sued a fi­nal de­ci­sion [re­ject­ing the com­plaint] on that case in June 2015.

“We aren’t deal­ing with that is­sue again here – and that part of your com­plaint can’t be re­opened. So our in­volve­ment in that part of your com­plaint has ended.”

Mr Camp­bell said he was “shocked” to be told that the om­buds­man was no longer look­ing at why he ended up on the stan­dard vari­able rate. He had been wait­ing for a de­ci­sion for more than three years.

The bulk of the om­buds­man’s judg­ment deals with the bank’s ac­tions af­ter Mr Camp­bell fell into ar­rears – but he is won­der­ing why San­tander put him on to the stan­dard vari­able rate in the first place, a ques­tion that is not ad­dressed in the rul­ing.

The as­pect of the case that the om­buds­man is still in­ves­ti­gat­ing con­cerns San­tander’s de­ci­sion to raise its stan­dard vari­able rate from 4.24pc to 4.74pc in Septem­ber 2012. Mr Camp­bell is not the only bor­rower with this com­plaint.

A spokesman for the om­buds­man said it would not com­ment specif­i­cally on Mr Camp­bell’s case as it was still on­go­ing.

He added: “We have seen com­plaints in which the con­sumers are un­happy that the vari­able in­ter­est rate on their loans has ei­ther stayed the same or in­creased dur­ing what has, over the last few years, been an en­vi­ron­ment with gen­er­ally fall­ing in­ter­est rates.

“We’ve been tak­ing a close look at the clause in the orig­i­nal bor­row­ing agree­ments which al­low in­ter­est rate vari­a­tions as well as the rea­sons given for any changes to the rate payable.”

Mean­while, another bor­rower, a cus­tomer of Bank of Scot­land, has fi­nally been told that the lender will let him move to another loan with­out hav­ing to pass an af­ford­abil­ity test – six years af­ter he first asked.

Ear­lier this month Tele­graph Money re­ported that another Bank of Scot­land bor­rower, who did not wish to be iden­ti­fied, was due to re­ceive com­pen­sa­tion worth thou­sands of pounds af­ter an om­buds­man ruled that he had been wrongly forced on to the stan­dard vari­able rate and should have been of­fered a cheaper mort­gage.

We know of at least one other case where the om­buds­man has ruled against a bank for forc­ing a cus­tomer on to a stan­dard vari­able rate.

Philip Pan­telouris, 56, bor­rowed £2m on a self-cer­ti­fi­ca­tion in­tere­stonly mort­gage in 2008. His ini­tial rate was 0.45 of a per­cent­age point above the base rate.

When this in­tro­duc­tory rate ex­pired, in 2011, he tried to re­mort­gage – but he was told he didn’t qual­ify be­cause he couldn’t af­ford it.

Mr Pan­telouris, a prop­erty de­vel­oper, said his an­nual in­come var­ied be­tween noth­ing and £1m, so he couldn’t prove a steady in­come for the pur­poses of an af­ford­abil­ity check.

His rate in­creased to 4.95pc and his pay­ments rose to £4,000 a month – a fig­ure he strug­gled to af­ford.

He tried to re­duce the rate again a year ago, but was again told that he could not re­mort­gage be­cause of af­ford­abil­ity cri­te­ria and be­cause he didn’t have an “ac­cept­able re­pay­ment ve­hi­cle” – a means to re­pay the cap­i­tal at the ex­piry of the in­ter­est-only loan.

As re­cently as Fe­bru­ary 10 the bank sent Mr Pan­telouris a let­ter stat­ing that he had to pro­vide ev­i­dence of his in­come in or­der to be able to switch.

Only af­ter this news­pa­per be­came in­volved and pointed out that it was break­ing rules set down by the City reg­u­la­tor did the bank re­lent and al­low him to switch with­out an as­sess­ment.

The day af­ter we got in touch, Bank of Scot­land called and fi­nally told him that he would be able to switch to a two-year fixed rate, at 2.75pc. This will re­duce his monthly re­pay­ments to a more af­ford­able £1,796. The bank also promised that he would be able to switch to a new fixed rate at the end of this pe­riod.

He said: “I will now try my best to sell the prop­erty to clear the loan once and for all and start again, free of this debt.”

But he still faces the ques­tion of the six years of pay­ments made at the higher rate. He es­ti­mates that pay­ing the stan­dard vari­able rate cost him a to­tal of £130,000 over the six years since he first asked to switch.

A spokesman for the bank said it had needed “ad­di­tional in­for­ma­tion” to find the most suit­able mort­gage for Mr Pan­telouris.

‘I some­times earn £1m a year – but I failed the bank’s af­ford­abil­ity checks’

Christo­pher Camp­bell, who was forced on to San­tander’s stan­dard vari­able rate

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