Bank of Ireland increase differential on tracker rates

Reply to the comment left by "Puzzler " at "08/11/2013 - 17:25":

Puzzler
Fair comment why may I ask you have left it this long. or are you Gavins wife?

Reply to the comment left by "Puzzler " at "08/11/2013 - 17:25":

Dear Puzzler, I am happy to stand corrected but isn't it the differential that has been raised , which has the effect of us paying more (almost double!!!)at the moment. If this is so I don't see " that any action will be overtaken by events when rates go up" as you suggest. My worry is that they could just keep putting the differential up, (but I wonder if I have got this wrong, as I have never seen this mentioned, ) and the bank rates will go up too. A differential rise and a bank rate rise that really would give people problems.

Well Ian - Puzzler has certainly puzzled me. These comments were posted in March and being as I am mentioned by name I have gone through them to see if I was impolite to Gavin's contribution. Well if I was I cannot find it. So Puzzler before you start "naming and shaming" people get your facts right.

Secondly I have no problem with forum members giving me a "reality check" as it helps to keep us all grounded. What I do object to is petty spats( Yes I know I have had a go above) when the objective is constructive discussion. But like all individuals I will respond if I am unjustifiably attacked. And Mark is the moderator - not the peacekeeper/censor/nursemaid etc. He is far to busy to get involved.

Now with all the minutiae out of the way and in an attempt to move the discussion forward as an affected BOI borrower, I was very interested in a couple of contributions over the last couple of weeks. One was about using the direct debit guarantee to get your money back, and the other was going to County Court- both of which end up with the same result if successful. This is of course prior to any class action.

Mark - Do we have any legal updates or advice on this please?

Reply to the comment left by "LucyM " at "08/11/2013 - 22:17":

If the differential were to increase in the future. Then surely the answer would be to switch lenders. So is a subjective point that one can only consider at a later date.

There's no benefit to lenders in creating distress in the property market. As this would merely compound their own internal issues. As has been the case since 2008. Banks in general have been reducing the size of their balance sheets in an orderly manner.

Reply to the comment left by "Colin Childs" at "09/11/2013 - 17:12":

The issue with switching lenders Colin is - it is only available to those with enough equity and/or long enough leases ( on leasehold property) to enable borrowers to do so. If the LTV on a property is above 85% then you will not be able to switch. Many borrowers took out 85% BTL mortgages, which were common just as the prices had hit their peak in 2006/7.Many are now on effectively a 100% mortgage as the value has dropped ( or the surveyor overvalued - read the stuff on Inside Track) Likewise if a lease is only 60-70 years - then you cannot switch. One of the reasons that the Unfair Contracts path is being sought is that a contract can be deemed unfair if the borrower is unable to move the loan. Many BOI ( and I guess WBBS) borrowers are in this position. So switching borrowers is not wholly straightforward.

Reply to the comment left by "Gary Nock" at "09/11/2013 - 17:54":

The inability to remortgage is a matter for each individual borrower. As in this regard they have to take responsibility for their own business and their own decisions. . One would question what has happened to the profit that they've made in the the intervening period.
As an aside was reading today that out out of 150,000 BTL mortgages in Eire, some 40,000 are in arrears.In total Irish banks are exposed £35 billion of mortgage debt with some £4 billion of arrears, £2 billion of which is over 2 years. Explains why BOI is unable to support the UK operation with capital funding.

The issue with switching lenders is not a decision for each individual borrower if they do not have that decision to make due to the factors previously stated (too little equity, short leases etc) If a lender unexpectedly decides to move the goalposts at a time that suits them, then the borrower cannot plan for such eventualities. This is why the Unfair Contracts legislation makes clauses in consumer contracts that prevent a consumer moving their business unfair. They can plan for interest rate rises based on the global and local picture, but they cannot plan for such unforeseen eventualities such as interest rate rises when interest rates as a whole are not moving or are in fact reducing as seen recently in the Eurozone.

Profits that landlords have made in the intervening period should have been used to build up their cash reserves and liquidity in preparation for such rises, rather than consumer spending. Paying down a loan is only a good idea if you can easily get the money out again if needed. And remember that being a landlord does not mean that the rent is all profit. When you take out letting fees, insurances, gas certificates, repairs, voids, and bad tenants who do not pay, then the net yield is somewhere around 5-6% on capital employed. And then there is tax at the prevailing rate.

And in relation to funding etc the question about profits in the intervening period also refers to the banks. What have they done with the profits they were making in the "boom years"? Should they not have prepared for both increases and decreases in the interest rate, and peaks and troughs in the property market rather than paying big bonuses? And should they expect the UK consumer to pay for their mistakes?

Reply to the comment left by "Colin Childs" at "11/11/2013 - 22:49":

Colin, you really need to delve a lot deeper than you are. Headline figures mean nothing. If you spend some time looking at the detail of exactly what is happening in, and being reported by, the Bank of Ireland you'd make some proper informed groundbreaking opinions on things that real;ly will, change the game. I know, I've done the work - you'd be surprised at what you'll find. I implore you, don't keep shooting from the hip - there's far too much of that being done on this forum - get into the detail. Sorry if you think I'm singling you out, I don't intend to, but you do seem to generalise too much and in doing so go down blind alleys.

Gary, Apologies if I picked on you unfairly and belatedly, you called another poster "naive" - my main rant was against "andy blatchford" whose name was for some reason removed from my post but you can see the date and time. I just don't think calling people names or telling them not to continue posting because they presenting an alternative view is very professional or courteous.

Reply to the comment left by "ian " at "08/11/2013 - 20:17":

I just came across this thread again and was reading back to the original posts. LOL I do not know Gavin at all, just thought he was getting a lot of unfair flak as his points are quite valid..