Bank of Ireland tracker mortgage % increase

disposalist

JimmyTheWig wrote: »

If they and/or the ombudsman agrees with you on this, what do you hope to happen to you personally?
Do you realise that where mis-selling happens all that you end up with is being put back in the position you were in if the mis-selling hadn't have happened?
Do you think that you would be better off, now, if you had chosen a different mortgage?

Whilst I'm not sure, either, if the mis-selling argument is the way to go, I think it could easily be said that people would be better off if they had not bought the product, couldn't it?

Sure there were other banks years ago offering good tracker deals that haven't now hit hard times and decided to shaft their customers to mitigate things? Right now, deals aren't great, but that doesn't mean there aren't lots of other folks out there are trackers with small differentials?

Mind you, if BoI gets away with this, I don't doubt other banks will be tempted to try the same abuse, so perhaps we'll all be inthe same boat soon.

JimmyTheWig

disposalist wrote: »

Another thing that has surprised me over this issue is the lack of concern by others. It's clear there no sympathy for "landlord" as an occupation, but this isn't just BTL landlords being ruined; 'normal' folks already hard-pushed these days are going to lose their homes from a sudden doubling of mortgage payments.

I think the lack of sympathy comes because these people are on a variable rate, and as such should be aware that this rate can go up.
The Bank of England base rate came down pretty dramatically quickly. Fair enough not all in one go, but still quickly. It could, at least theoretically, go back up just as quickly. People on a variable rate need to be aware of this and need to protect themselves against it. That's the main reason why I'm on a fixed rate.
Being on a fixed rate, I am aware that I have been paying more than someone on an old tracker for the last few years. But that was my choice, because I didn't want my rate to go up.
The other point is that I believe the rate that the BoI are talking about is only in line with what the rates were like when these people took out these mortgages. If they could afford them then then you would imagine they can afford them now.

disposalist

motch wrote: »

The thing is with the BTL it's a business and personally for me if I was to go into a business I'd double/treble check everything, and make sure i'd have a plan B, C etc
It's probably one to get your solicitor onto.
Perhaps it's just me being over careful if investing 10's or 100's of thousands into a Business.

With the last bit about affecting the pre 2001 mortgages, surely anyone who bought a BTL in the 90's must have a huge equity in the property today?

Noone plans for tracker rates to suddenly double. That's exactly what they are not supposed to do. One's main expenditure suddenly doubling can screw anyone's business.

And whether or not someone has equity doesn't mean that being forced to sell a property isn't a seriously crappy prospect.

I know people who have had the pensions destroyed recently such that the equity in their property is their only retirement fund - if they are forced to sell in a short time-frame, that's a disaster.

There are lots of well planned businesses that have gone to the wall because of the banks over the last few years. 'Evil landlord' or not, noone deserves to fail so banks can service their shareholders (?)

JimmyTheWig

disposalist wrote: »

Whilst I'm not sure, either, if the mis-selling argument is the way to go, I think it could easily be said that people would be better off if they had not bought the product, couldn't it?

Sure there were other banks years ago offering good tracker deals that haven't now hit hard times and decided to shaft their customers to mitigate things? Right now, deals aren't great, but that doesn't mean there aren't lots of other folks out there are trackers with small differentials?

Mind you, if BoI gets away with this, I don't doubt other banks will be tempted to try the same abuse, so perhaps we'll all be inthe same boat soon.

If other tracker providers back then had the same clause then mis-selling won't help you even if those other providers haven't (and never do) activate the clause.
If you weren't mis-sold (i.e. if you were given all the correct information at the time) then you'd have no reason to choose a different bank with this clause over BoI with this clause.
If you'd have gone with a tracker with this clause anyway then there is nothing to argue that you wouldn't have gone with BoI. And so, if not mis-sold to, you would still be in the position you are in now.
If, having been told about the clause, you would have gone for a fixed rate then the chances are that you'd have paid significantly _more_ over the last 10 years than you have done, so I don't think that mis-selling would help.

disposalist

JimmyTheWig wrote: »

I think the lack of sympathy comes because these people are on a variable rate, and as such should be aware that this rate can go up.
The Bank of England base rate came down pretty dramatically quickly. Fair enough not all in one go, but still quickly. It could, at least theoretically, go back up just as quickly. People on a variable rate need to be aware of this and need to protect themselves against it. That's the main reason why I'm on a fixed rate.
Being on a fixed rate, I am aware that I have been paying more than someone on an old tracker for the last few years. But that was my choice, because I didn't want my rate to go up.
The other point is that I believe the rate that the BoI are talking about is only in line with what the rates were like when these people took out these mortgages. If they could afford them then then you would imagine they can afford them now.

Of course variable rates can go up, but that's the whole point here - people have planned on tracking the base-rate (and possibly mitigated against it in other investments, like having savings income *shrug*) and the rate *hasn't* gone up (as everyone knows it won't, because the BoE are talking about going negative even) - BoI have suddenly and unexpectedly doubled their differential!

A 'dramatic' base-rate change still takes many months if not years. There is just no way the BoE would ever raise the rate by 2.75% in 2 months because they know it would cause economic disaster.

But BoI are allowed because it's just greedy landlords that'll suffer (except it's not).

Until all the other banks start doing it... Good luck everyone...

disposalist

JimmyTheWig wrote: »

If other tracker providers back then had the same clause then mis-selling won't help you even if those other providers haven't (and never do) activate the clause.
If you weren't mis-sold (i.e. if you were given all the correct information at the time) then you'd have no reason to choose a different bank with this clause over BoI with this clause.
If you'd have gone with a tracker with this clause anyway then there is nothing to argue that you wouldn't have gone with BoI. And so, if not mis-sold to, you would still be in the position you are in now.
If, having been told about the clause, you would have gone for a fixed rate then the chances are that you'd have paid significantly _more_ over the last 10 years than you have done, so I don't think that mis-selling would help.

Well described, Jimmy - I think I'm finally understanding the mis-selling principal! Not one for this situation then.

In a way it's just legal semantics, though. I feel like I've been mis-lead (perhaps not a legal definition) when a 'tracker' so wildly doesn't track.

motch

disposalist wrote: »

Noone plans for tracker rates to suddenly double. That's exactly what they are not supposed to do. One's main expenditure suddenly doubling can screw anyone's business.

And whether or not someone has equity doesn't mean that being forced to sell a property isn't a seriously crappy prospect.

I know people who have had the pensions destroyed recently such that the equity in their property is their only retirement fund - if they are forced to sell in a short time-frame, that's a disaster.

There are lots of well planned businesses that have gone to the wall because of the banks over the last few years. 'Evil landlord' or not, noone deserves to fail so banks can service their shareholders (?)

Yes all of what you say is true...

However a lot of BTL is based on (or was) House Price Increase and having Low rates to make it viable/Profitable.

A lot of people (Both BTL and residential to be fair) have MEW'ed, thanks to the rises in House prices.

Yes it's not really fair BOI have raised the rates, and for the record I think it is worth fighting.

So if it someone has 50% or so equity in a BTL property from the 90's and this doesn't get sorted, then surely it's worth at least thinking of selling and realising the profits?

the trouble is a lot have gone on to re-invest in more BTL at a later date using equity/debt, and the belief house prices would increase 3-10% in value every year.

Don't get me wrong i'm not anti "evil landlord" by any means.

markkw

Q. Why do we use solicitors for conveyancing?

A. To protect us from making costly mistakes.

If, as is normal, your solicitor acted for both yourself and the bank then if the mortgage contract is weighted heavily in favour of one party there may be a conflict of interest issue and your solicitor may be liable.

In May, after the bank takes the first increase, might a small claim jointly against BoI and your solicitor give a clearer idea of the legal position?

---

On another point, were you ever deceived, however innocently, by the bank, their broker or any other relevant person? If so, you may have a Tort of Deceit claim.

disposalist

motch wrote: »

So if it someone has 50% or so equity in a BTL property from the 90's and this doesn't get sorted, then surely it's worth at least thinking of selling and realising the profits?

the trouble is a lot have gone on to re-invest in more BTL at a later date using equity/debt, and the belief house prices would increase 3-10% in value every year.

Don't get me wrong i'm not anti "evil landlord" by any means.

You are right, there - personally, I needed to move from London when prices were down and was given a good BTL deal by Bristol and West.

Fast-forward some years of not enjoying being a landlord and trying to get a good price for the flat and suddenly, whatever happens (forced to sell or keep renting it out) I'm going to be spending (or lose or not make or however you want to put it) thousands more than expected due to BoI stuffing up their business.

There was a lot of greed in the BTL landlord arena, I know - I do know folks who did what I did but then kept going which is now going to bite them hard, but none of them are 'nasty' landlords and none of them deserve to have a contract loophole taken advantage of to ruin them.

Anyway - I'm done posting here I think - I've made my views known and I hope I've persuaded some to 'the cause' enough to be bothered to complain to BoI and FOS and 'the media'.

Here's hoping for a fair outcome...

As a final note: nice to see headlines like this in the Guardian money blog: -

"Bank of Ireland's tracker rate rise must be reversed
Shifting the goalposts for tracker mortgage customers should worry anyone with a similar loan."

disposalist

Ok not quite done yet. After reading the Guardian blog I wrote to BoI mortgage customer services: -

"I am moved to draw your attention to this recent Guardian article as I could not put the situation any better and obviously, my research resources are bound to be lesser: -

http://www.guardian.co.uk/money/blog/2013/mar/02/bank-ireland-rate-rise-reverse

I feel I am being terribly and unfairly mistreated in the matter of my tracker rate being doubled. I am fully aware of how the Bank of Ireland feels they are contractually allowed to make the rate increase, but would appreciate an official response from the Bank of Ireland relating to how this issue relates to Treating Customers Fairly requirements.

In case you cannot visit the above link, I will cut-and-paste the article below.

"Bank of Ireland's tracker rate rise must be reversed
Shifting the goalposts for tracker mortgage customers should worry anyone with a similar loan

The Bank of Ireland's decision to move tracker mortgage customers to a rate of 4.49% over base is 'extraordinary'.

The extraordinary decision by Bank of Ireland to move its tracker mortgage customers to a minimum of 4.49% over Bank of England base rate, regardless of the deal originally signed, is of concern not just to its 13,500 affected customers but to the millions of households with a tracker or fixed-rate loan. As we report today, customers such as Gary Smith will see their monthly bill more than triple from £243 to £780. If, with a stroke of a pen, Bank of Ireland can invoke a "special condition" clause to renege on a contract, then presumably any mortgage company can violate their contracts, too.

Ray Boulger, the most respected mortgage expert in the UK, tells me that many, if not all, lenders have buried deep in the small print "exceptional circumstances" clauses which, among other things, allow them to demand you repay your mortgage, in its entirety, at a month's notice.

Some may argue that we are, indeed, in exceptional circumstances, particularly if you are Bank of Ireland. Its home market has collapsed. One in every six mortgages in Ireland are in arrears of 90 days or more. The bank's share price is down 98%. When I rang the UK's Council of Mortgage Lenders for comment, it said that there has been a "very exceptional change to market conditions since the loans were taken out". The CML insisted it was not endorsing Bank of Ireland's move, but pointing out the situation some lenders may be in.

Boulger puts it rather more bluntly: "Essentially what they are saying is that if we !!!! up, then everyone else can pay for our !!!!-up."

In any case, Bank of Ireland's problems in its domestic market should have no bearing on its UK operations. In 2010, desperate to protect its lucrative deal with the Post Office, Bank of Ireland created a separately capitalised UK arm, subject to UK authorisation and regulation, and coming under the UK's compensation arrangements, not Ireland's, should it fail. Santander has an identical arrangement. So it should matter not a jot how the parent company is performing in Dublin (unless, of course, these "ringfences" are not as robust the regulators assure us).

As it happens, the UK arm of Bank of Ireland seems not to share its parent's financial woes. In a trading update last November, Bank of Ireland's group chief financial officer, Andrew Keating, said that "following some easing of competitive intensity in the UK deposit market, the group has been able to reduce the rate it pays to attract new deposits and to retain existing deposits on roll over in that market".

Bank of Ireland appears to be so flush with cash from depositors that it is able to lend the money out to new customers at "best buy" mortgage rates, starting at 2.74% for a five-year fix. Yet it expects its existing customers to believe its financial position is so precarious they have no choice but to accept a giant rate hike.

Understandably, mortgage brokers are warning homebuyers to think hard before taking out a Post Office mortgage. Bank of Ireland has shot the Post Office's reputation "to smithereens", says Boulger.

Bank of Ireland, if it has sense, should accept it has made a serious error of judgment and reverse its rate rise. You may not quite believe this, given how the banks have behaved over the last decade, but the rules in the Financial Services Authority's conduct of business handbook state clearly that companies must be "fair, clear and not misleading" in their communications with customers. Did the bank (and Bristol & West, which it acquired in 1997) make it clear to customers that their mortgage deal could be varied so dramatically? It will be interesting to see the opinion of the FSA and the ombudsman in this matter.

At heart this must be a simple issue of contract law. Bank of Ireland will want to rely on its "special condition" clause. Homeowners will no doubt be asking for the courts to dismiss it as an unfair contract term.

Maybe Vince Cable could have a word with them. Bank of Ireland says that in November 2010, it received "the explicit support of the UK coalition government for its continued partnership with the Post Office" in a document signed by Cable. After this shambles, maybe that support should no longer be forthcoming.""