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BoI borrowers push ahead with class action against rate hike

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Landlords being hit with a tracker mortgage rate hike by the Bank of Ireland today are pushing ahead with a class action for damages after a “positive” legal opinion.

In February, the Bank of Ireland revealed it is more than doubling the rate for 13,500 borrowers on its tracker mortgages, some 7 per cent of its borrowers.

Around half of those affected are buy-to-let borrowers who will see rates increase from 1.75 per cent above base rate to 4.49 per cent above base today. Residential borrowers will see their rates rise in two stages, firstly to 2.49 per cent today and then to 3.99 per cent on 1 October.

The bank blames the rise on increasing capital requirements.

In response, more than 250 landlords have looked to form a class action against the bank and sought legal opinion. They claim the change in mortgage contract is unfair and should not be allowed to stand.

Yesterday the group received the full barrister’s opinion detailing their options and chances of success and Law Department solicitor Justin Selig, who is leading the legal action, is today writing to all members to inform them of the next steps.

All class action members are being encouraged to complain to the Financial Ombudsman Service.

Borrowers are then being split into two categories of amateur and professional landlords.

Amateur landlords, who have other jobs and own only one or two properties, may be deemed consumers and a test case with the Office for Fair Trading will be pursued.

Professional landlords are being given a range of options to pursue such as suing for damages. If it proceeds to litigation then landlords will be claiming damages for the extra 2.74 per cent rate increase for the rest of the term.

For a 15-year term, landlords will be claiming 41.1 per cent of the value of their debt or £82,000 for a £200,000 mortgage.

Property118.com owner Mark Alexander, who is part of the action, says: “The barrister did not put a percentage on it when rating our chances of success but his report was very positive. We are very confident because there is plenty of case law, particularly for consumers, comparable to this action.”

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  1. I really hope they win. If they do, it will, however be the first egg on the face of the FCA who recently stated they thought the terms were fair. Interesting fight to keep an eye on over the coming months

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