Landlord Action, in association with Property118.com, may take legal action against the Bank of Ireland following a massive rise in its tracker mortgage rate.
Justin Selig, Landlord Action director and solicitor, has obtained expert opinion that such an action would have good chance of success.
In February, Bank of Ireland and Bristol and West wrote to 13,500 borrowers those who took out tracker mortgages prior to 31 October 2004, advising that the rate would increase from 1 May 2013.
The buy-to-let rate will rise from 2.25 per cent – made up of Bank Rate plus 1.75 per cent – to 4.99 per cent, representing Bank Rate plus 4.49 per cent.
For residential customers, changes will be introduced in two stages. From 1 May, they will pay Bank Rate plus 2.49 per cent. On October 1, it goes up to 3.99 per cent.
Borrowers are incensed because they believed that they were on lifetime tracker mortgages paying a fixed margin over the Bank of England base rate.
So far almost 300 mortgage holders have requested the forms to sign up and join the action. Joining costs £100+VAT. Landlord Action says that borrowers will get advice, and prepared letters of complaint. To join contact justin@landlordaction.co.uk
Andrew Tyrie MP, who chairs the Treasury Select Committee, has written to the Financial Conduct Authority asking it to investigate potential mis-selling and to examine whether the Bank of Ireland mortgage agreements contained unfair clauses.
Which? has called on Bank of Ireland “to do the right thing by mortgage customers” and believes that the bank is potentially treating customers unfairly by hiking rates using clauses buried in the small print.
The consumer watchdog is urging customers to complain if they were led to believe their rate would track the Bank of England base rate by the same amount for the term of their mortgage or if their mortgage had ‘life’ or ‘lifetime’ in its name.
Which? has created a free online tool to make it easy for consumers to complain directly to the Bank of Ireland, at www.which.co.uk/bankofireland.
Which? executive director Richard Lloyd said: “Burying such important changes in the small print is wholly unfair. Bank of Ireland is taking advantage of its customers by hiking rates at a time when the base rate is static.”
In a statement Bank of Ireland said: “This increase is permitted by a specific clause in these mortgage contracts, which allows an increase in the interest rate differential after the guarantee period (i.e. after 31 December 2006). This clause was clearly referenced in the pre-sale offer document provided to the customer and the customer’s intermediary prior to completion.
“This change reflects the significant increase in the cost of funding these mortgages since 2008 and the need for banks to maintain greater levels of capital. This rate increase does not affect Post Office customers.
“Bank of Ireland has a range of mortgages available to customers who would like to review their mortgage options. If a customer decides to move to an alternative mortgage provider, no Early Repayment Charges will apply.
“Bank of Ireland has provided a dedicated support line and encourages customers who wish to discuss the impact of the increase on them to contact the Bank in the first instance (Freephone telephone number: 0800 345 7512).
“We are conscious of the consequences for our customers and will treat any associated difficulties with appropriate care.”
