Tracker rate scandal sees more families lose their homes

Arrears exacerbated by banks’ refusal to offer low-cost rates to which they were entitled

Some lenders have yet to disclose full details of the impact of their refusal to offer tracker rates to thousands of customers. Photograph: iStock

Some lenders have yet to disclose full details of the impact of their refusal to offer tracker rates to thousands of customers. Photograph: iStock

 

New figures show that at least 60 families have lost their homes as a result of Ireland’s tracker mortgage scandal.

And the figure will rise further, with a number of lenders yet to disclose full details of the impact of their refusal to offer tracker rates to thousands of customers.

Lenders must update the Central Bank by the weekend on the overcharging debacle which has been hanging over the industry for the past two years.

If the rate of home losses at Bank of Ireland and KBC is in line with the other main banks, over 100 families may have lost their homes on the back of arrears that were exacerbated by banks’ refusals to offer them low-cost rates, linked to the European Central Bank benchmark, to which they were entitled.

Belgian-owned KBC Bank Ireland on Thursday became the latest lender to concede, before the Oireachtas finance committee, that some of its borrowers suffered the loss of their homes as a result of being wrongly denied their contractual rights to an ECB tracker rate over the past decade.

But the bank’s chief executive, Wim Verbraeken, declined to give details on precisely how many customers had been overcharged to the extent that they ran into arrears and ultimately lost their homes.

The country’s lenders have set aside hundreds of millions of euro for redress and compensation as the Central Bank estimates that up to 15,000 borrowers were impacted by the tracker rate issue across 15 lenders.

Initial investigation

Meanwhile, Permanent TSB (PTSB), which previously disclosed in 2015 that 22 homes were lost following an initial investigation into problems in its tracker loan book, has now found a further five to 10 cases, after widening its review last year.

All told, 1,951 overcharged customers were uncovered by the two examinations, PTSB executives told the Oireachtas committee on Thursday.

Earlier in the week, AIB reiterated to the committee that it had identified 14 cases of wrongful home losses out of 3,500 cases of mortgage overcharging.

Ulster Bank has previously stated that 15 people had been forced to give up their homes as a result of the overcharging scandal. However, it is expected to indicate next week that further investigation has led it to reduce that number slightly.

Bank of Ireland is alone among the State’s largest five mortgage lenders not to indicate whether it had uncovered cases of customers losing their homes as a result of being on a higher rate than they were entitled to.

KBC is also alone among the country’s top five home lenders not to indicate how many of its customers had been affected by the tracker mortgage scandal or how much it has set aside to cover redress and compensation.

“It’s premature to disclose any interim, partial figures, or amounts,” Mr Verbraeken told the committee.

Seeking redress

Speaking at a public meeting of more than 70 KBC mortgage borrowers on Thursday evening, financial adviser Padraic Kissane, who has run a long campaign aimed at seeking redress for tracker mortgage customers, criticised the bank for failing to give such information.

“If you watched KBC before the Oireachtas committee, you can see the battle we’re going to have,” Mr Kissane said.

The financial adviser said that there were seven cohorts of KBC borrowers impacted by the controversy, mainly people who took out mortgages with the lender in 2006 and 2007, before the crisis.

KBC told the committee that it would miss the deadline set by the Central Bank for this weekend, by which lenders were expected to have identified all impacted customers, commenced engagement with most of them, and filed a report with the regulator.