Bank of Ireland increase differential on tracker rates

Gavin this is a naive comment. On the one property I have with BOI with this clause I am on 85% LTV with a leasehold house on 65 years. It will cost me a total of 30k to buy the freehold to make it remortgageable and pump enough money in to get it down to a reasonable LTV due to falling property prices. It is not as easy as just changing lenders. I have been in BTL for 10 years and have no intention of getting out over a rate rise. In addition to the extra £150 a month it is the sense of injustice that these lenders can just increase rates. The extra money is to be quite honest not a game changer for me but It may be to a lot of others on this forum and your comments are unhelpful.

Its still a very low rate. Your buy to let model should surely be able to take this and still make a profit?

You have had 3-4 years of extra low rates where you could of ploughed the extra money into your mortgage. I think the sense of injustice is still clearly with savers who have been crushed rather than landlords who are still doing alright at 4.99%

@Gavin

Your comments are somewhat narrow minded and I wonder whether you work for the BOI?

If for example the BOI only imposed a small % increase and over a longer period it would have a less severe impact on borrowers.

Lets offer you a more extreme scenario and maybe you can think about your answer.

Let's say that the BOI chose to raise the differential by 10%. Would you conclude that this was reasonable?

And now consider the comments of other members who have quite clearly stated that for some it is impossible to change lender either because of earning potential or other reasons such as negative or low equity.

Please consider at the very least the circumstances of others when you choose the words for your input to this forum.

RE "And now consider the comments of other members who have quite clearly stated that for some it is impossible to change lender either because of earning potential or other reasons such as negative or low equity."

Is this because people have over paid or taken too much equity out?

You have 4 years to sort your books out, did you think this would last for ever. Bank rates will be forced higher despite the BOE rate being 0.5%.

BOI is in turmoil, there is no money left, the bank is bankrupt.

And in the booklet sent with the demand BoI state " BOI have a healthy mortgage business in the UK"......................

Doesn't sound like turmoil to me.

@Gavin

Please consider the following few points of the many which have been and are to be raised:

1. Those with the clause did not know what the clause meant
2. People loose jobs through no fault of their own and therefore can not change lender at the moment or in the near future
3. The clause could be unfair as it might not have been stated in clear understandable words.
4. Negative or low equity could be a result of declining house prices rather than someone remortgaging etc.

And now I ask you to consider your previous harsh words to those customers affected by this. Are you with me so far?

I have a great deal of sympathy with those saddled with this BoI rate hike. If as some say, the detail was burried within the contract small print, then it's a no brainer and you should object in writing to BoI and then write to the Financial Ombudsman Service without delay.

On a more general point, in my opinion, BTL is a business and should be run as a business. Not as a hands off investment product.
As in all businesses you assess the risks from all aspects. In the case of BTL you should always stress test your borrowings against a normalised BoE Base Rate. This would typically be between 5% and 6%. If you are borrowing at 1.5% + BBR then you must ensure your yield is in excess of 7.5%.
With BBR set to be retained for the time being at an historic low rate, now is the time to save your profits and use the funds to lower the borrowings in preparation of the inevitable hike in the future.
I have little sympathy for people, Companies or Governments, who blow the profits in the in the good times and then feel agrieved when adjustments in the market make things too tough for them to handle later on.

Some of the recent comments seem a little suspicious to me. The issue is one of contract and whether any clause that BOI want to invoke now was clearly a part of the original contract, or was it buried somewhere so deep in the T's and C's that only now are BOI beginning to see the wriggle room they might have. The general health of BOI and whether the current (or even proposed rate) is very low, is completely irrelevant. A contract is a contract.

I have no idea if I am affected by this as I am currently in Italy until next weekend. I had a fixed mortgage that reverted a year or so ago and am delighted to be on such a low rate. I fully intend to stay on this rate and will happily be part of a class action.

Just thought I'd add to this post, as I'm the "Angry Gary Smith" from the Guardian Money article.

It was font page of the weekend supplement - I was also quoted on the BBC Money Box program.

I'm a residential mortgage holder, and was not anticipating any mortgage payment increases until such time as the B of E announced them.

RE Richard Kent "4. Negative or low equity could be a result of declining house prices rather than someone remortgaging etc.

And now I ask you to consider your previous harsh words to those customers affected by this. Are you with me so far?"

Yes a highly predictable factor and it is still clear that house prices have a lot further to fall. So make provision.

Could you please point to my so called harsh words?

4.99% is a low interest rate, no one should be in trouble at paying these rates unless they have been recklessly gambling. Even then they have had 4 years to sort them selves out all at savers expense.