"Thousands" with BOE trackers face mortgage interest rate rise

Graham_Devon

Thousands of mortgage borrowers with Bank of Ireland and subsidiary Bristol and West will see the cost of their home loan nearly double.

The bank has announced that it is to raise the rate on its Base Rate Tracker mortgages, despite the Bank rate remaining at 0.5%.

It has the power to charge a top-up level of interest on these home loans, even if the Bank rate does not move. It blamed the rising cost of providing these mortgages and rules on capital.

Banks must hold a buffer of capital to a certain level in order to keep to European rules.

A tracker that doesn't track. (Thousands appears to mean 13,000).

On 1st May, borrowers will see their rate rise from 1.75% to 2.49%. it will then rise again to 3.99% in October.

Strange thing is, they have hit BTL borrowers harder, raising it to 4.49% straight away on 1st May. Thought BTL borrowers were always seen as less risky? Or maybe they are playing a political game here?

Beleive this is ther first tracker mortgage which has decided to rip up the tracker term though?

One BTL borrower will apparently see their payment rise over £700 each month, with just two months notice. Obviously these sorts of rises can not simply be passed on to the tenant. very little time to sort out another mortgage, if indeed, they can, as apparently a lot of these are self cert deals.

http://www.bbc.co.uk/news/business-21615831

Graham_Devon

Some interesting comments here:

https://forums.moneysavingexpert.com/discussion/4470099

Apparently some landlords will have no profit at all left at 4.9%. Which seems a little odd. Surely they had thought about rates being higher than that?

IronWolf

Any sensible BTL landlord will have considered the implications of an eventual rate rise and have planned what to do in such an event so it really shouldn't be much of a problem although it will obviously reduces profits.

BTL that aren't sensible however could be up poo creak without a paddle.

james_toney

there will be a lot of P!$$ed off people, one poor guy has 5 btl mortgages with them, something to bear in mind for any future landlords.

System

Seems quite harsh to make such a large change with short notice, but it's an insignificant amount of mortgages in the grand scheme of things.

Bank of Ireland aren't going to be selling mortgages to many new customers after this stunt thats for sure.

grizzly1911

james_toney wrote: »

there will be a lot of P!$$ed off people, one poor guy has 5 btl mortgages with them, something to bear in mind for any future landlords.

Like investments they need to be spread around to mitigate risk.

HAMISH_MCTAVISH

Just another instance of crooked banksters shamelessly reneging on agreements and screwing over their customers.

Looks like there will be some legal action taken, probably under mis-selling, as if the ability to change the banks margin was not clearly laid out to customers, and they thought they were buying a lifetime tracker at a margin above base, then hiding a get-out in the small print is unlikely to stand up to challenge.

Graham_Devon

james_toney wrote: »

there will be a lot of P!$$ed off people, one poor guy has 5 btl mortgages with them, something to bear in mind for any future landlords.

I found myself posting on that thread. Feel harsh now. However, apparently this is going to "ruin" quite a few people. One thinks he will now be reposessed.

Thing is, if 4.49% ruins people, surely theres a lot of gambling going on here? It's difficult to feel compassion for people who haven't thought about rates at 3%+ (taking their tracker to the 4.49% mark).

How are BTL's operating if this bankrupts them?!

Third, doesn't this highlight the problem with ultra low rates? How many "zombie" households are out there if people can't even afford the base rate to hit 3% without losing their home / BTL.

I understand them being angry, even though it is in the T&Cs, as stated by a couple of the BTLs on that thread. But can't really understand how people could be in such a position to lose their homes and BTLs over it. It's still a low rate compared to every decade gone past in the last century!

james_toney

the thing is what if other lenders do the same???

but i thought most BTL mortgages were about 5% all the ones i looked at were

james_toney

Graham_Devon wrote: »

I found myself posting on that thread. Feel harsh now. However, apparently this is going to "ruin" quite a few people. One thinks he will now be reposessed.

Thing is, if 4.49% ruins people, surely theres a lot of gambling going on here? It's difficult to feel compassion for people who haven't thought about rates at 3%+ (taking their tracker to the 4.49% mark).

How are BTL's operating if this bankrupts them?!

Third, doesn't this highlight the problem with ultra low rates? How many "zombie" households are out there if people can't even afford the base rate to hit 3% without losing their home / BTL.

I understand them being angry, even though it is in the T&Cs, as stated by a couple of the BTLs on that thread. But can't really understand how people could be in such a position to lose their homes and BTLs over it. It's still a low rate compared to every decade gone past in the last century!

i saw your post and agreed with you on it mate,. 5% is still low very low in fact

Graham_Devon

HAMISH_MCTAVISH wrote: »

Just another instance of crooked banksters shamelessly reneging on agreements and screwing over their customers.

Looks like there will be some legal action taken, probably under mis-selling, as if the ability to change the banks margin was not clearly laid out to customers, and they thought they were buying a lifetime tracker at a margin above base, then hiding a get-out in the small print is unlikely to stand up to challenge.

Thing is H, it's clearly laid out in the T&C's, as a couple of landlords effected have stated. It clearly states they may have to raise the rate at any point and will give 30 days notice.

They are also free to leave without fee's. Thing is, no ones offering the same deal, and if they change, it's most likely going to be to an even higher rate than that with BOI have hiked to, such is the market out there.

They did have a good run though.