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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Fed Up Landlord

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8:16 AM, 2nd October 2013, About 11 years ago

Call me cynical but strange this has happened just after the West Brom hike and following the media attention this has received. Talk about bolting the FCA door after the BOI and WBBS has run off with all our money. Same old same old regulator. On the side of the banking industry and slow to react to consumers concerns. Is this a sop to our campaigns or a retrospective " Oh dear look here's another lender that's done it. We best do something that makes us look like we are concerned"

michael murphy

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9:51 AM, 2nd October 2013, About 11 years ago

Hi
Regarding FCA entering into discussions with the mortgage industry re, tracker rates, I have my doubts if they will include Buy to Let investors.
Regards
Murf

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10:41 AM, 2nd October 2013, About 11 years ago

Two of our buy to let mortgages are affected by the BOI interest hike increasing our costs on these two properties by £283/month. The rent on these two properties is £975/month so i need to increase the rent on them to £1258 , a 29% increase , to cover the BOI interest hike.
I think we should all write to our MPs , tell them how much the interest hike is costing us and how much we intend to increase rent by to cover it.
They might show some interest if the rent on thousands of properties will increase by over 25% if nothing is done !

Mark Alexander - Founder of Property118

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11:11 AM, 2nd October 2013, About 11 years ago

Reply to the comment left by "Stuart Dixon" at "02/10/2013 - 10:41":

MP's are smart enough to realise that rents are set by market forces and that if you increase your rents by 25% the likelihood is that you tenants will move out and that you will have a very long void period.

You may do better with the following arguments:-

Consumer Contracts Regulations 1999 (UTCCRs) – the reference case is OFT vs Foxtons 2008 – see >>> http://www.oft.gov.uk/OFTwork/consumer-enforcement/consumer-enforcement-completed/foxtons/#.UkvdwdKsiM4

Advertising Standards and Financial Promotions regulations, specifically the principles of “clear, fair and not misleading”
.

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12:58 PM, 2nd October 2013, About 11 years ago

Reply to the comment left by "Stuart Dixon" at "02/10/2013 - 10:41":

Stuart, did you reduce your tenants rent by 60% or more when base rates dropped from 5% or more to 0.5%?
Cant have it both ways!

Mark Alexander - Founder of Property118

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9:14 AM, 4th October 2013, About 11 years ago

I have just sent an email as follows to all who have registered an interest in joining or already committed to the BoI Class Action .....

Dear .....

I am concerned that the Class Action against BoI appears to have stalled and I am keen to get this re-started at the earliest possible opportunity.

The starting point for this is to promote what we are trying to achieve in order to reach the remaining 12,300 remain affected by the increases. By pure "coincidence" many of the people who signed up to the Class Action were were the beneficiaries of the BoI's decision to back track for 1,200 borrowers. I smell a rat there but it could be pure coincidence as I've said.

We need to put a lot more pressure on the FCA to seek their own advice based on our barristers opinion and the defence presented to them by the BoI.

We believe the FCA’s response is a whitewash. They have simply used the BoI response to our case as a reason not to pursue it. They have not obtained their own independent advice so the FCA is not acting as an independent arbitrator. The BoI response is a note from their barrister who they asked to find ways round our argument. It is not an independent review of the actions of BOI. The FCA has not given us a chance to respond to the BOI arguments. They have simply taken their version and gone with it. Much of their arguments are shaky to say the least.

I am confident the announcements from West Bromwich Building Society will strengthen our case but I also feel we must press on with matters ourselves and recruit more support from the industry by reaching out to more affected BoI borrowers.

To raise the game I would like to post a letter to every mortgage broker in the UK to let them know about our Class Action campaigns against West Bromwich Building Society and the Bank of Ireland. I can rent a database mailing list of all their names and addresses from Experian and I have an established relationship with a company which will mail-merge and print the letters, put them into envelopes and post them for 39 pence each including postage. There are thousands of brokers, I will find out exactly how many tomorrow when I hear back from Experian.

Most mortgage brokers will have received telephone calls from concerned clients but may not know about our Class Action campaigns. The best most of them will have been able to do is advise their clients on the viability of remortgaging and in most cases this will not be justifiable even with the rate hike to the tracker margins.

Having been a mortgage broker myself I know the value of being helpful to clients in distress as it results in goodwill and referrals. Brokers will also be concerned about loss of credibility and the potential of losing business and income if they are not seen to be able to help. If brokers know about our campaigns they will refer their clients to us.

Once we have a lot more people signed up a new plan of action will be formulated and details of costs to take part will be distributed. The Class Action funding for the West Brom case has been costed out to £240 per property. To keep things fair to all those who have contributed so far, existing contributions will be deducted from the amount due at the next round of fund-raising.

Ideally I'm hoping that you will donate £50 to the marketing fund mentioned above, less is fine if you can't stretch to that, more is obviously much better.

Would you be prepared to help fund this?

If so please PLEASE CLICK HERE
.

Ian Hamilton

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10:35 AM, 4th October 2013, About 11 years ago

Reply to the comment left by "Mark Alexander" at "04/10/2013 - 09:14":

Mark, rather than trying to go it alone, would it not be better to join forces with other organisations such as the RLA and NLA.
"United we stand decided we fall"

Cheers
Ian

Mark Alexander - Founder of Property118

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10:48 AM, 4th October 2013, About 11 years ago

Reply to the comment left by "Ian Hamilton" at "04/10/2013 - 10:35":

Hi Ian

We have requested their support and many of their members have done the same.

We live in hope!
.

ian

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16:50 PM, 4th October 2013, About 11 years ago

It would be great if we could get the same response as WB are giving, just looks like BoI mortgagees have just accepted the raise they would rather pay thousands than pennies ( must be them that are Irish not the Bank ) I would be one of the first to put more in the pot but Id probably be one of a handful ? If however there is a lot of interest then I'm in.
Understand if you pull the plug many thanks for what you & Justin have done.

John Smith

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17:44 PM, 4th October 2013, About 11 years ago

Bof I are saying they borrow funds at 2.5% ( seems high!)

http://www.businessworld.ie/livenews.htm?a=3102634;s=rollingnews.htm

Don;t take this as a negative but there is a separate question as to why they are adding too much of a premium over their cost of borrowing

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