Irish BoI tracker customers avoid increased UK charges

Bank of Ireland has confirmed that its Irish tracker customers are safe from margin increases, despite the bank revealing vastly increased charges for 13,500 UK tracker customers.

Some of the bank’s UK customers will see their monthly mortgage costs as much as triple as the terms of their base rate tracker deals are changed.

The move, which has prompted fury among affected customers, sees Bank of Ireland triggering a “special condition” clause contained in loan agreements that, it says, allows it to increase the interest rate “differential” on some of its UK base rate tracker mortgages.

A spokeswoman for the bank said last night that the same “absolutely cannot happen here in Ireland”. She said the UK tracker loans were “different products” with “different conditions.

Increases

The UK changes affect around 13,500 residential and buy-to-let customers. They mean that a buy-to-let mortgage holder currently enjoying a typical interest rate of 2.25 per cent (comprised of the Bank of England base rate, which is currently 0.5 per cent plus a 1.75 percentage-point differential) will be paying 4.99 per cent.

Some residential mortgage customers are paying a rate of 1.39 per cent or less, and will see this jump to 4.49 per cent.

The spokeswoman said the changes “reflect the significant increase in the cost of funding these mortgages since 2008 and the need for banks to maintain greater levels of capital”.

The changes will apply to 7 per cent of Bank of Ireland UK mortgage customers, the majority of whom are buy-to-let customers. More than 80 per cent of affected mortgage-holders have a loan-to-value ratio of 60 per cent or below.

Expressed their anger

UK customers went online to express their anger, with some saying they had already contacted the UK Financial Ombudsman Service.

"Is this legal, feels more like robbery to me, how can they change a contracted agreement just to pay for their shortcomings," said one poster on the MoneySavingExpert.comwebsite.

– (Additional reporting: Guardian service)