Bank of Ireland increase differential on tracker rates
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.
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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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Member Since September 2013 - Comments: 333
10:59 AM, 6th March 2013, About 13 years ago
@Pete
Pete, its believed the date is important (Before 31st October 2004) and not whether it is Buy To Let.
BOI said that if you were affected you will have received a letter by now.
11:01 AM, 6th March 2013, About 13 years ago
If a class action covering BTL mortgages against BOI was successful in resisting the tracker differential change, would this have any relevance to residential mortgages?
Member Since September 2013 - Comments: 333
11:04 AM, 6th March 2013, About 13 years ago
@Pete
It is believed that no Post Office deals are affected.
It sounds like you are in the clear judging from your previous comments about the date.
Member Since January 2011 - Comments: 12193 - Articles: 1395
11:05 AM, 6th March 2013, About 13 years ago
@Mark Fielder – in a word, YES 🙂
11:18 AM, 6th March 2013, About 13 years ago
It looks like i may be one of the lucky ones for now….. To be honest, certainly in the BTL sector its a wake up call and I suspect there may be more sell offs depressing the housing markets even further. All very well getting your rent and meeting the mortgage payments but if the rates change and you start having to pump your own money in. Note to self maybe pay a bit extra each month whilst the times are good. I really feel for the people who have residential mortagages and will be trapped by this theft and disception.
Member Since January 2011 - Comments: 12193 - Articles: 1395
11:24 AM, 6th March 2013, About 13 years ago
@Pete – increasing your monthly payments is the last thing I would recommend you do. Please see >>> https://www.property118.com/index.php/what-you-shouldnt-do-with-your-buy-to-let-mortgage/
Member Since September 2013 - Comments: 333
11:27 AM, 6th March 2013, About 13 years ago
@Pete,
Pete, it goes a bit wider than that – Also think about the clients with BTL mortgages who have moved into their former BTL and using it as their principal residence.
Quite common.
11:42 AM, 6th March 2013, About 13 years ago
Text of a letter I’ve just put together for BOI. Would appreciate Positive OR negative comments.
=======
We have received your letter of 25th February 2013 informing us that the interest rate paid by us on the above mortgage is to increase because of an incredible increase in the ‘differential’.
When we took out the mortgage we were led to believe that ‘Tracker’ meant that the interest rate would track the Bank of England Base rate by a fixed percentage for the life of the mortgage.
Any references to ‘differential’ were certainly not highlighted and it is only in retrospect that we now find these buried in the small print and very unspecific in terms of the circumstance and amount of any changes that may be made.
The wording in your documentation is neither clear nor transparent and you now demand a more than doubling of our mortgage repayment from 2.25% to 4.99% based on this.
Bank base rate changes were and are acceptable risk. This increase in the differential is not acceptable.
We demand therefore that you withdraw this excessive increase and return to the status quo.
If you are not prepared to do this then I would like you to open an official complaint file and to confirm that my complaint has been filed and recorded in accordance with your official complaints procedure.
=====
Member Since January 2011 - Comments: 12193 - Articles: 1395
11:53 AM, 6th March 2013, About 13 years ago
ILLUSIVE DOCUMENT
Justin Selig, the solicitor advising on this matter, needs a copy of the BOI/B&W pre-October 2004 buy to let mortgage terms and conditions booklet.
If you have one please email it to me – [email protected] or fax it directly to Justin Selig on 0207 183 9575 or post it to:-
Justin Selig
The Law Department
7A Wellington Road
London NW10 5LJ
Justin may be able to get hold of a copy from BOI but this could save time.
Thanks in advance.
Member Since July 2013 - Comments: 89
12:28 PM, 6th March 2013, About 13 years ago
Mark, Interesting development!
Ive just come off the phone with Bank of Ireland to see which of my 8 Bank of Ireland property BTL accounts are affected. Ive received 3 letters for 3 properties, but only a main account & odd sub account have been affected. Concerned about my other 5 BTL main deals with BoI are all pre 31 Oct 2004, i asked if these we’re affected too (with fingers crossed that they weren’t) None of my other pre Oct 2004 mortgages we’re affected. I asked about pre & post 31 Oct 2004 & the advisor 100% confirmed its nothing to do with a date, its to do with T&C’s of a particular mortgage product they sold. My affected codes we’re product X26 & X27, these are BoI code & apparently dont mean anything to me. I think they do! I have requested T&C’s for the 3 affected accounts & lodged a formal complaint.
I also asked if it was likely in the future my other accounts could be altered to which i was advised & I quote ‘If the bank could do something to alter the mortgage rate they would have done it by now with these changes’
Let me know if you need a copy of these T&C’s when they arrive in a few days.