Although this article is about Bank of Ireland in the U.K., is there any reason the same thing won’t happen in Ireland? Last out turn off the lights please!
Customers are left furious after a leading bank hikes rates on its tracker mortgages – despite no change in the base rate. Some 13,500 UK homeowners face a steep increase in mortgage payments as the Bank of Ireland doubles the rates on some loans. Customers vented anger online following the news, with some saying their costs will jump by as much as £500 a month.
The changes – which affect mainly buy-to-let base rate tracker mortgages- come despite the key rate being held at a record 0.5% low for four years by the Bank of England (BoE).
Over 170 comments – many from angry customers – were posted on the web forum MoneySavingExpert.com after the Bank of Ireland sent letters to those affected. Forum user ‘smiffy’ said the interest payment on their mortgage would increase from £243 to £780 a month. “I can fund a £100 per month increase I need to find over £500!” they wrote. While ‘plimsolls_on’ posted: “I am in the Bank of Ireland boat stuck up a creek with no paddle….”My rate will increase from 1.35% to 4.49%.” A number of customers said they planned to write to the bank and the Financial Ombudsmen to complain.
The changes mean that a buy-to-let mortgage holder who is currently on a typical interest rate of 2.25%, made up of the base rate plus 1.75%, will see their rate climb to 4.99% from May 1. The Bank Of Ireland said the average monthly increase would be £145 a month. Residential mortgage customers will see their rates eventually jump to 4.49% based on the current BoE rate. The increase for these customers will be introduced in two stages – from May 1, the rate will be the BoE rate plus 2.49%, followed by another rise to the BoE rate plus 3.99% on October 1.
Ray Boulger, a mortgage industry expert at John Charcol, said he was surprised by the move. “My initial reaction was shock – it’s extremely shoddy practice,” he told Sky News. “If the Bank of Ireland was looking for a way to maximise the distrust of banks, they have succeeded.” He added that a clear justification of the hike was lacking: “They Bank of Ireland need to explain why they think they can get away with this.”
In a statement, the bank said: “This change reflects the significant increase in the cost of funding these mortgages since 2008 and the need for banks to maintain greater levels of capital.” But Mr Boulger said a change in market conditions was not sufficient to explain the move. “If you enter into a contract and you say you’ll provide funds at a certain rate and, during the terms of that contract conditions change, that’s bad luck,” he said. “It’s a business risk that banks take on when they offer mortgages.”