The Bank of Ireland has claimed that customers were warned in the small print about possible rate increases, as it hiked its tracker rates overnight for thousands of customers.
Typical rates on the tracker mortgage have now more than doubled, from 1.75% to 2.99%. Residential mortgage customers are set to receive a further rise, to 3.99%, in October.
But most affected customers are thought to be buy-to-let mortgage customers, which will prompt even more severe increases.
This is despite a record-low Bank of England base rate, which has remained at 0.5% for over four years.
Many customers with tracker mortgages taken out with the bank over the last ten years believed that the rate would only rise if there was an increase in the base rate.
But it has come as a shock that the Bank of Ireland has increased its tracker by such a considerable margin, following the announcement just seven weeks ago (read more).
The Bank of Ireland attributed the rate hike to the increased costs of operating these mortgages and the need to accumulate extra capital.
It added that a specific clause in the contracts permitted it to implement the increases.
Andrew Tyrie, the chairman of the Treasury Select Committee, has asked City regulator the Financial Conduct Authority to look into potential mis-selling practices (read more).
The FCA says that it has no jurisdiction to investigate.
Nevertheless, customers have been urged to forward complaints about the huge increase in their mortgage rates to the Financial Ombudsman Service, especially if the terminology included ‘life’, which had the potential to be misleading.
Keith McDonald
Which4U Editor
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