Bank of Ireland increase differential on tracker rates

Bank of Ireland increase differential on tracker rates

10:32 AM, 28th February 2013, About 12 years ago 1862

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The story of the Bank of Ireland decision to increase to the differential (interest rate margin) on  tracker mortgages started on this forum when a professional landlord contacted Property118 within minutes of a letter from Bank of Ireland landing on his door mat. What ensued was outrage from landlords and affected residential mortgage borrowers. The story was quickly picked up by the National Media as it wasn’t just the 13,500 affected borrowers who were worried.

Will this set a precedent for other mortgage lenders to follow?

Property118 reacted by using funds donated to The GOOD Landlords Campaign to underwrite the cost of a barristers opinion on the legality of the Bank of Ireland’s actions. The remainder of this thread,one of the most read and most commented threads of all time on Property118, continues to tell the story as it unfolds.

If you want to skip the story and cut to the chase simply CLICK HERE

Of the 13,500 affected borrowers, 1,200 have had the decision reversed by Bank of Ireland. With additional support and pressure we believe all affected borrowers can and will see justice done.

___________________________________________

Lee, a professional Landlord asks, “help! I have just received a letter from the Bank of Ireland stating they want to increase the differential on my tracker rates.

I have 12 mortgages with the Bank of Ireland previously Bristol and West. I have been on a base rate tracker of 1.75% above base, but now Bank of Ireland are using some fine print claiming they have to recapitalise and saying the ‘new differential will be 4.49%.

How can I fight back?”

The original policy wording seems to be:

6 INTEREST

Charging interest at a tracker rate

(j) Unless we change the differential (if any) under condition 6 (n), we will not change the tracker rate unless the base rate changes.

(m) in condition 6 (n):
– a “positive differential” means a percentage which we add to the base rate to arrive at the tracker rate; and a “negative differential” means a percentage which we subtract from the base rate to arrive at the tracker rate.

(n) We may reduce a positive differential or increase a negative differential at our discretion by giving you not less than seven days written notice. This means that we can change the differential in a way that is favourable to you.

The above seems to indicate that they can reduce the rate in my favour, but not give them the right to increase it. Am I correct?


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Mark Alexander - Founder of Property118

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22:24 PM, 18th May 2013, About 12 years ago

@Simon Benstead - that's an incredibly generous gesture, thank you. When you become a member of The GOOD Landlords Campaign you will be invited to make a one off donation. As you will be aware from this thread, The GOOD Landlords Campaign funds are used to share best practice amongst landlords and letting agents and were also used to kick start this fight against the wrong doings of Bank of Ireland by underwriting the initial costs associated with the barristers opinion. Donations may be made by secure payment arrangements we have in place via Paypal or Credit/Debit card at the point of joining The GOOD Landlords Campaign. Please see >>> http://www.property118.com/sponsor-the-good-landlords-campaign/ for further details

ian

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8:38 AM, 19th May 2013, About 12 years ago

Sunday Mail has another artical on bank, saying that they may have acted illegally.
Good to see we are getting more media coverage.

Andy Jones

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19:59 PM, 19th May 2013, About 12 years ago

Simon, THANK YOU, I am someone with a residential mortgage trying to fight this injustice and your gesture made my heart sing. It is very heartening to know that people such as yourself exist and care beyond themselves. I salute you sir and wish you a most happy life. May justice prevail. Andy - from Malvern

Darrell G

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22:48 PM, 19th May 2013, About 12 years ago

Has Andrew Tyrie had his reply yet?

Mark Alexander - Founder of Property118

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7:35 AM, 20th May 2013, About 12 years ago

@Darrell G - if he has had the reply I've certainly not heard anything about it yet. Not a good start for the FCA if a top politician can't get them to respond to his letters is it!

David Lawrenson

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9:00 AM, 20th May 2013, About 12 years ago

I quite agree Mark,

You really do wonder don't you about the effectiveness of the people who are supposed to be regulating this area and looking after all of us.

If such a strongly worded letter just gets ignored, what hope effective regulation.

Perhaps as part of this campaign you, or someone else involved, could remind Mr. Tyrie (and maybe the rest of the personal finance press too) that the letter is still awaiting a response.

Mark Alexander - Founder of Property118

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9:31 AM, 21st May 2013, About 12 years ago

Bank of Ireland issued the following press release and wrote to 1,200 borrowers today:-

In February this year Bank of Ireland UK wrote to 13,500 mortgage customers to advise that their base rate tracking differential would increase on 1st May. This increase is permitted by a specific clause in these mortgage contracts, which allows an increase in the interest rate differential after the guarantee period (after 31 December 2006). This change reflects the significant increase in the cost of funding these mortgages since 2008 and the need for banks to maintain greater levels of capital.

In line with the Bank’s commitment to treat all customers fairly and as part of our ongoing management of customer complaints we have identified two groups of customers where we will not be applying the increase to their base rate tracker mortgage. We have written to these customers and the Financial Conduct Authority has been informed of our decision and is supportive of our approach in excluding these customers.

The first group specifically relates to 1,000 Flexible mortgage customers who were actively using the flexible facilities on their mortgage account. These customers received a specific administrative letter linked to their transactions that might have caused some customers to believe the differential was for the term of their mortgage. The Bank has decided that anyone who has received this administrative letter will not have the increase in differential applied.

The second group of c. 200 customers are those that switched their mortgage product to a base rate tracker mortgage. These customers received documentation detailing that the differential on their mortgage was variable, but the mortgage conditions they received did not detail the circumstances under which the differential could be changed. As a result we are also removing these customers from the pool.

Des Crowley, Chief Executive, Bank of Ireland UK, commented: “We have said from the outset that we will review all customer complaints individually and that we are committed to treating customers fairly throughout the process, it is on this basis that we have removed these customers.”

Bank of Ireland UK will waive all early repayment charges for those customers to whom the differential increase applies and who wish to refinance their mortgage elsewhere.

What are your thoughts?

Tricia Collick

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10:09 AM, 21st May 2013, About 12 years ago

Not sure if this helps me and had no letter yet, the last letter said they were still looking into theit paperwork.
The 8 weeks is just up, will wait a few days and then write to the FOS with the forms they sent me if nothing satisfactory appears.

I had a fixed (B&W buy to let) from 2001 with follow on tracker of base + 1.75 % and then ported in 2004 when they said rates would remain unchanged .At that point they changed the mortgage number !.

Rob

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10:12 AM, 21st May 2013, About 12 years ago

There trying to make themselves look good by proving that they do in fact treat customers fairly, possibly so if they do find themselves up in front of a judge they can't be accused of not treating people fairly. Very good result for the 1200 people that are being let off but what about the other 11800 people still affected!! I think you've got them worried!

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10:18 AM, 21st May 2013, About 12 years ago

Well it's a start.....

Unfortunately I'm not one of the 1000 Flexible Mortgage customers what have been contacted today. I do have a Flexible Mortgage product, and have used this feature, but have not had the administrative letter to which the press release refers.

I've just phone BOI and they wont be sending me this letter 🙁

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