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.