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.”