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Brokers slam ‘utterly repugnant’ BoI rate hike

Brokers have slammed Bank of Ireland’s move to hike tracker rates for residential and buy-to-let borrowers as “utterly repugnant”.

Last week it emerged the bank is writing to 13,500 buy-to-let and residential customers on tracker mortgages informing them it is more than doubling the base-rate differential it charges.

Those on buy-to-let mortgages will see the rate jump from Bank of England base rate plus 1.75 per cent to base plus 4.49 per cent from 1 May.

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

Bank of Ireland cites a “special condition” in its mortgage contract that permits the hike. The bank says it will not levy redemption charges on those in a position to remortgage.

Brightstar Financial chief executive Rob Jupp says: “This is utterly repugnant and puts the UK financial services market into ill-repute when a lender can change the terms of their contract so hugely purely for commercial gain.

“I would be surprised if there was not a class action against Bank of Ireland as mortgage borrowers come together to try and seek legal advice.”

Your Mortgage Decisions director Dominic Lipnicki says: “There are plenty of mortgage prisoners who will have no choice but to pay the increased rates, which could well be the straw that breaks the camel’s back for them.

“This ultimately harms the whole market because if there is a rise in repossessions or people people being stuck where they are, it makes for a more stagnant market.”

Trinity Financial product and communications manager Aaron Strutt says: “If a borrower is worried, their only option is to speak to the bank but they are unlikely to be very helpful. Their customers are going to be shocked and livid.”



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There are 18 comments at the moment, we would love to hear your opinion too.

  1. Oh God I hope this bank is not the first of many. They (Banks) do not seem to care about their reputation anymore only making money for themselves at the expense of the poor old punter

  2. This decision by the BoI indicates that they consider these loans be something that they can do without on their books, that is, I believe they will allow customers to move with no penalty clause.

    That must be the key message the BoI is signalling here.

    As they say in Ireland, I would’nt have started from here and BoI mortgage borrowers must surely wish that was the case.

  3. Golden opportunity for the FSA to demonstrate their Treating Customers Fairly directive actually means treating customers fairly. If they have any balls they will force BOI to retract and fine them heavily for contempt of both customer and regulator.

  4. Utterly reprehensible. This is the sort of area where a strong regulator with consumer interests at its heart ought to come to the fore.

    O yes I forgot THERE ISN’T ONE…

  5. You can’t stop an organisation from trying to make a profit and so long as they do the same to every client then they are seen to be treating them fairly – will be the words of the FSA

  6. This reminds me of Santander’s attempt to charge customers holding its “free business banking forever” accounts last year.

    Fortunately, I had a copy of the original advertisement and successfully argued that, in accordance with Carlill v Carbolic Smoke Ball Company, the advertisement constituted an offer which I had accepted and was legally binding on Santander.

    Others were able to obtain copies of the website which they had responded to. In the end Santander announced it had “listened to its customers” or, as we say in England “been forced to climb down”.

    So if a borrower can get their hands on the promotional material they relied on then I think they have a strong case against Bank of Ireland.

    Somebody seems to be posting copies at

  7. Have a look at how Santander treats its existing mortgage book/customers too !

    Neil’s absolutely right – which begs the question why the MMR was ever dreamt up when lenders commercial considerations and decisions overide any issue of TCF.

    Pointless !!!

  8. “This ultimately harms the whole market because if there is a rise in repossessions or people people being stuck where they are, it makes for a more stagnant market.”

    No it doesn’t. An increase in repos would free up the market and increase transaction volumes by supplying the market with accurately-priced properties (that’s what an auction result is, by definition – the correct market value for that property).

    Obviously, more repossessions mean lower prices – but that is neither ‘good’ nor ‘bad’ for the market. A market has no preference for high or low prices – it is simply a mechanism for setting the correct price.

    Individual market participants may not like it (if they are sellers) or they may like it (buyers). But the market as a whole benefits from higher transaction volumes as that gives more accurate pricing.

  9. I have a Bank of Ireand mortgage, and Anon 10.16 might be interested to know – I “didn’t start from here”….I started with a Bristol & West mortgage, which was taken over by Bank of Ireland.

    I’m disgusted by this, and indeed think it’s very likely to be open to legal challenge.

  10. IFA @ 11:56 am

    Hmmm, so the craic isn’t good – I had forgotten about B&W being taken over by the BoI.

    What is it about financial products?

    One minute they are swimming along nicely and the next moment they have somehow transformed themselves into an all-devouring monster.

    Time-and-time again, this has happened with these financial products.

    You would expect it with the more speculative end of the financial spectrum but when ‘bog-standard’ products such as mortgages turn into something unpleasant then there must be serious cause for concern.

    I mean, you are apparently an IFA and have been caught out here, so what hope does Joe Public have?

  11. This article is a completely over the top rant.

    These borrowers took the mortgages out years before the BOE rate was slashed to 0.5% so use to paying the higher rates. 4.49% is very low still and they are not charged a fee to move else where. The simple fact is it costs a lot more for BOI to borrow money so it needs to clear books or raise charges to survive.

    On top of landlords years of low mortgage costs landlords have been hiking rents massively. They have profited at the expense of savers and denied first time buyers homes.

    I have no sympathy with the only people being repossessed being the utterly reckless. The sooner we return to a true capitalist economy and stop bailing out the gamblers the better.

  12. Am I missing something here? I have a B of I mortgage too that was once Bristol & West. These changes took place last year!

  13. I hope to God others don’r follow suit. Think of the number of HSBC clients with base rate tracker mortgages !!

  14. oh yet again another bank shafts their clients ,not good for the reputation of banks ,what a good advert for Post Ofiice mortgages which are funded by BOI,I dont understand how they get away with it ,WHAT ABOUT TCF!!!!!

  15. Scott Taylor-Barr 8th March 2013 at 2:28 pm

    BoI withdraw from new lending in the UK some time ago and I’m sure this is the next step in their withdrawal from the UK market.

    There are many good solid points made here – yes; rates would have been higher when the mortgage was originally taken out and BoI are allowing folks to move ERC free. So for those that did not spend the savings produced when rates fell, or those in a position to remortgage away it is not a serious issue.

    However, there are also those who have maybe seen a change in circumstance (such as a redundency) since they took on the mortgage and the reduced rate is what has allowed them to keep their home – these people are going to be in serious trouble with increases such as these and are not likely to be able to move.

    For this second group I hope that the FSA shows some true consumer spirit and steps in, one way or another.

  16. Re Gavin @ 12.23pm

    Oh dear Gavin – so it’s Ok for BOI to raise interest rates because they need to make profit and to justify your statement it’s only profiteering landlords who will suffer.

    Two wrongs do not make a right !!

    BOI and customers entered into a contract and now that BOI are financially suffering they want to change the terms and charge extra interest. Is it the customers’ fault – NO.

    Will you be expecting any sympathy when you get shafted by a big company ? I hope not !!.

    If BOI are successful do you think other lenders will follow suit ? I see mobile phone companies are joining in with increasing “fixed” monthly contracts. Where will it end ?

  17. I dont remember all this fuss when Skipton did the same in February 2010

  18. Har, har, har, haa, ha. I can’t stop my sides splitting. Typical whinging British scumbags. Happy to trouser the upside. Moan like stuck pigs when they get the downside. Probably wish they had fixed their mortgage like the fixed rate business borrowers (sorry, “swap victims”) did. Trouble is, they’d have moaned that the variable rate had dropped below the fix, bailed out into variable, just in time to catch the escalator up.

    The public are pathetic. The lot of you.

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