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BoI reverses mortgage rate hike for 1,200 borrowers

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The Bank of Ireland has reversed its tracker mortgage rate hike for 1,200 of 13,500 affected customers.

On 1 May, the bank increased the rate on its tracker rate mortgages. For buy-to-let borrowers, the rate jumped from Bank of England base rate plus 1.75 per cent, to rate plus 4.49 per cent.

For residential borrowers, the increase will be applied to in two separate stages. From 1 May, it rose from base plus 1.75 per cent to base plus 2.49 per cent. From 1 October, it will be subject to yet another increase, taking it to base plus 3.99 per cent.

The BoI says the increases are due to extra capital requirements. The bank is being pursued by more than 300 customers in a class action who argue the contract term was unfair and the rise should not stand.

But BoI now says it has identified two groups of customers who will receive a refund for anything charged since 1 May and will not be subject to the rise. It says the decision has the backing of the Financial Conduct Authority. 

The first group specifically relates to 1,000 flexible mortgage customers who were actively using the flexible facilities on their mortgage account.

These customers received a specific administrative letter linked to their transactions that might have caused some customers to believe the rate would last for the whole mortgage term.

The bank says anyone who received this letter will not see their rates rise.

The second group relates to around 200 customers who switched their mortgage to a base rate tracker mortgage.

These customers received documentation showing that the rate could change but the banks says the mortgage conditions did not detail the circumstances when a change could occur. As a result those customers will also not be affected by the rise.

BoI chief executive Des Crowley says: “We have said from the outset that we will review all customer complaints individually and that we are committed to treating customers fairly throughout the process, it is on this basis that we have removed these customers.”

Bank of Ireland UK will waive all early repayment charges for those customers to whom the differential increase applies and who wish to refinance their mortgage elsewhere.

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Comments

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  1. Mark Alexander 22nd May 2013 at 2:54 pm

    At the time of writing this post over 20,000 people have read our original forum thread over on Property118 and nearly 700 comments have been left.
    Affected borrowers were outraged when we first released this news and many others with tracker rate mortgages became fearful that if Bank of Ireland get away with this other mortgage lenders will follow suit.
    Our article was picked by Google News very quickly and this sparked massive media interest. We are very grateful for the Press coverage, especially the BBC, The Times and several mortgage magazines who have worked very closely with us and used the Property118 forum to engage with affected borrowers to add a human element to their reports.
    As the thread progressed Property118 contacted Landlord Action and paul Shamplina put us in touch with his new business partner, Julstin Selig at The Law Department for advice advice on starting a Class Action.
    Funds from The GOOD Landlords Campaign (administered by Property118) were used to underwrite Counsels opinion which amounted to over 40 pages of legal advice from one of London’s leading banking barristers at 11 Stone Buildings.
    Contributions to the Class Action fighting fund of £100 + VAT per affected borrower now amount to nearly £10,000. This money has paid for legal advice to both residential and BTL borrowers who have signed up and a case has also been prepared by barristers for submission to the OFT and the FCA to demonstrate why the BOI’s actions are illegal and should be challenged in Court by regulators in the public interest. If the OFT can be persuaded to fund the case at litigation this will avoid the need to raise hundreds of thousands of pounds to fund costs and will also negate the risks of the Class Action being ordered to pay the BOI’s legal costs in the event of losing the case.
    I issued the following statement to the Press yesterday “Clearly there is only so much legal advice that the funds raised to date can purchase so it is imperative for more affected borrowers to join the Class Action. The legal steps to date could be described as “Gorilla Warfare” against the Bank of Ireland and the submission to the OFT is effectively a call to bring in the Cavalry. Some affected borrowers have questioned why a Court Injunction has not been applied for to defer any rate rise until a legal case has been heard by the Courts. The reality of the situation is that a lot more funding would be necessary for such action. Hopefully this is the action the OFT will take but in the meantime it is vitally important that thousands more affected borrowers join in. Far too many affected borrowers seem to be hoping to take a free ride on the back of others’ commitment and I would urge those people to reconsider their position in order to accelerate progress.
    If you are affected by the BOI Tracker Rate Differential change please sign up to the Class Action (see the link below).
    http://www.property118.com/?p=39733
    DO NOT allow Bank of Ireland to get away with this.
    If you are not directly affected, but you are concerned about the potential ramifications and the possibility of other lenders following the lead of the Bank of Ireland please show your support by recommending and becoming a member of The GOOD Landlords Campaign

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