ENDOWMENT MORTGAGES being sold to house buyers by banks in the early 1990s had all the transparency of cast concrete, financial adviser Eddie Hobbs told a judge yesterday.
Mr Hobbs is giving expert evidence in a negligence claim against the Bank of Ireland by pensioners Louis and Margaret Kilmartin, Strand Road, Portmarnock, Co Dublin, who allege they lost more than €22,000 over the 15-year lifetime of the mortgage on their home.
David Hardiman, for the Kilmartins, told the Circuit Civil Court they incurred loss as a result of negligent advice by the bank regarding the superior security and return of endowment mortgages as opposed to annuity ones.
It is the first of numerous claims due before the court against finance houses which advised clients against buying an annuity mortgage and which allegedly failed to warn them of risk attached to endowment mortgages.
Alex Owens, for the bank, which denied negligence, said his client’s position was very simple. The endowment mortgage sold to the couple proved €5,000 cheaper than an annuity mortgage.
The court heard the Kilmartins had been promised a “nice little nest egg” after a 15-year repayment, but Mr Kilmartin had to repay the shortfall of €4,864 from his retirement pension, at age 68.
Ms Kilmartin had been sold an endowment policy and told it would pay off the €50,000 mortgage with surplus in 15 years.
Mr Hobbs’s evidence before Circuit Court president Mr Justice Matthew Deery continues today.