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Shock Increases for Borrowers

Written By On 01/05/2013

The Bank of Ireland are today raising thousands of loans for borrowers that took out tracker mortgages with them before 2004. Thirteen thousand, five hundred of their customers affected were initially informed that the loan they had taken out was a lifetime tracker. As far as they were aware this meant that whatever tracker rate was agreed, it would be added onto the base rate, which has remained at 0.5% for over four years now.

However, as from today they have been increased to 2.99% which in most cases, works out at least double to what they were paying previously. It doesn't just stop at that. Home owners, which equates to approximately one third of the borrowers concerned, are due a further increase in October later this year rising to 3.99%.

The other 66% are buy to let investors and they have been hit even harder. Apparently their increase will not be in two steps as they will have to pay the complete amount now.

BOI are not the only bank enforcing these rises. Subsidiaries of the bank which include Bristol and West will see similar increases. The bank says that borrowers that have been affected had been warned of the increase in the agreement's 'small print'.

The BOI's website states

Bank of Ireland UK recently notified approximately 13,500 of its mortgage customers of increases in the interest rate differential (the difference between Bank of England base rate and the total interest rate payable) on their base rate tracker mortgages. This increase applies solely to mortgages where there is a specific clause in the contract which allows for an increase in the interest rate differential after the guarantee period (i.e. after 31st December 2006). The mortgages affected are only those taken out between Jan 2001 and December 2004 that carry the clause in question.

Lawyers are advising borrowers to contact the Financial Ombudsman for help and launch an official complaint. Many feel that the bank has not conformed to the correct standards of morality. Which? are advising that any who have the word 'life' in their contract have a legitimate case.