Have I a case over a top-up mortgage with no tracker offer?
Q&A: Dominic Coyle
By 2009, all the banks had woken up to the reality of the unsustainable rates they had been offering on trackers. Photograph: Dara Mac Dónaill
In 2008, I took out a tracker mortgage for a self-build. I subsequently needed more money to complete the build and, in 2009, requested a top-up on the original mortgage. I was made to take out a second mortgage for the smaller sum and denied the tracker rate that I had (and still have) for the first mortgage.
Do I have a case against Bank of Ireland?
Unfortunately I do not have any documentation to support my request for a tracker, all dealings were verbal in branch with the branch manager.
Mr T.D., email
The tracker you got in 2008 would have been just before banks started pulling these products. Essentially, you got in just under the wire with the first mortgage loan.
When you went back looking for a top-up, this was quite appropriately treated as a new loan from the bank’s point of view. They would have gone through the same process of ensuring you were a good risk for the repayments – insofar as any banks were carrying out proper risk assessments at that stage.
They clearly thought you were a good bet and offered you the money you were looking for. However, by 2009, all the banks had woken up to the reality of the unsustainable rates they had been offering on trackers and some of the poor bets they had made on lending, including 100+ per cent loans etc.
Bank of Ireland had initially opted not to withdraw its tracker offer on new loans but simply to set the tracker margin – the amount over the ECB rate – at such a high level that they were not remotely attractive.
However, in October 2008, they formally withdrew trackers as a product for all new lending. With AIB, Bank of Ireland was among the last to withdraw the product (the last significant player, NIB, followed within days).
So, by the time you applied for the top-up in 2009, the tracker was not an available option for new loans – even though the bank was obliged to honour existing tracker agreements, such as the one you still have on your initial mortgage loan.
The bank cannot be held to account for failing to offer a product that is not on its books so you have no case against the bank at this stage.
As you suspect, even if the bank had been offering trackers at that stage, you would have been in a poor position to argue the case if you had no paperwork supporting your request for a tracker, and if all your dealings with the branch manager had been verbal. That is why I always recommend dealing in writing (even email) and, if necessary, sending a note confirming the contents of a phone call. A paper trail is a wonderful thing to support a case in the event of dispute.
However, in this instance, it’s all academic as, in my view, you have no case against the bank.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to email@example.com. This column is a reader service and is not intended to replace professional advice.