Today (21 May), the Bank of Ireland no longer plans to demand higher interest rate payments on 1,200 customers’ mortgages, but 12,300 customers will still have to pay the increased rate.
In February this year Bank of Ireland UK wrote to 13,500 mortgage customers to tell them their base rate tracking mortgage would increase from Bank of England base rate plus 1.75 per cent to plus 4.49 per cent on 1 May.
This increase was permitted by a specific clause in those customers mortgage contracts, which allowed an increase in the interest rate after the guarantee period - after 31 December 2006.
According to the Bank of Ireland, it had to ask their mortgage customers to cough up more cash because of the significant increase in the cost of funding of these mortgages since 2008 and the need for banks to maintain greater levels of capital.
However, the Bank of Ireland today revealed because of its commitment to “treat all customers fairly” it had identified two groups of customers who will not see an increase to their base rate tracker mortgage.
The Bank of Ireland has written to these customers and the Financial Conduct Authority has been informed of the lender’s decision and was said to be supportive of saving these customers from the rate hike.
The first group specifically relates to 1,000 flexible mortgage customers who were actively using the flexible facilities on their mortgage account.
These customers received a specific administrative letter linked to their transactions that might have caused some customers to believe the differential was for the term of their mortgage.
The Bank has decided that anyone who has received this administrative letter will not have to pay the increased rate.
The second group of about 200 customers are those that switched their mortgage product to a base rate tracker mortgage.
These customers received documentation detailing the differential on their mortgage was variable, but the mortgage conditions they received did not detail the circumstances under which the differential could be changed.
As a result, the Bank of Ireland confirmed these customers would also now not be hit with greater mortgage repayments.
Des Crowley, chief executive of Bank of Ireland UK, said: “We have said from the outset that we will review all customer complaints individually and that we are committed to treating customers fairly throughout the process, it is on this basis that we have removed these customers.”
Bank of Ireland UK will also waive all early repayment charges for customers who still face an increase in their mortgage rate because of the differential term in their contract and who wish to refinance elsewhere.
Post Office mortgage customers were not affected by the increase.
