Yorkshire and Clydesdale Bank Mortgage Error‎

by Mark Johnston

Thousands of already cash strapped borrowers are facing increases to their monthly mortgage payments due to an error caused by Clydesdale and Yorkshire Bank.

Around 18,000 customers of the two banks who currently hold variable and tracker rate mortgages are effected by the error. The 18,000 customers now face increases from £25 to literally hundreds of pounds.

Both banks are owned by National Australia Bank (NAB). NAB took over The Clydesdale back in 1987 when midland sold its UK subsidiaries. The Yorkshire Bank was taken over in 2001by Clydesdale and has retained its mostly Yorkshire based branches and its name.

The error is a result of the two banks calculating capital payments incorrectly. The miscalculation resulted in both banks collecting less than the minimum monthly payment. This was made worse by the record low interest rates. These underpayments have led to many of its customers having shortfalls on their mortgages which means they will not pay off their mortgages within the agreed term.

Affected borrowers now need to make up the shortfall by overpaying otherwise they will not be able to pay off their mortgage in the required time.

A Clydesdale Bank spokesperson said: “First and foremost we are very sorry that this error has happened.”

Both banks have now written to the affected customers to suggest ways that they can make up the shortfall. Many of the customers are angry because they have trusted the banks to administer their mortgage correctly and now the letter seems to suggest that this has not happened.

Avril Simmons, 55, of Doune, Perthshire, told the BBC Scotland news website: “I received a letter from Clydesdale Bank telling me that they had made a mistake in their calculations when the mortgage was initially taken out and I would now face increased monthly payments.

“The tone of their second letter, after I had written to complain and demand they take the financial responsibility, was very patronising and they effectively tried to put the blame on me.

“I responded saying it was the bank who were not facing their responsibilities as they had been employed by me in a professional capacity, and I had trusted their integrity.”

Avril added: “I hope this exposure forces the banks to admit responsibility.”

Paul Hodgson has had notification from the Clydesdale that his monthly repayments will increase by £160 per month even thought he has only had is mortgage 2 years. This seems to indicate that the calculations made by the Australian owned banks were way out.

Another customer with the Yorkshire bank has been asked to pay £200 because of the error they have made and simply cannot afford it, especially in these difficult time. Many of their customers have referred their cases to the financial ombudsman as they think the banks should make up the difference because they were the ones that made the mistake.

The Banks have confirmed that the vast majority of our customers are not affected. The majority of those that are will have to pay less than £25 a month extra.

Steve Reid, retail director for Clydesdale Bank, said: “We would like to reassure mortgage customers that they need take no action unless they have received a letter from us.

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