Around 10% of the mortgage customers affected by the Bank of Ireland UK’s recent rate hikes are to become exempt after the bank identified specific groups that would no longer qualify for the increase.
The much-criticised bank doubled its mortgage rates for around 13,500 customers on May 1, despite the imminent extension of a government lending scheme that has driven high-street mortgage rates to record lows.
Around half of the customers affected by the change are landlords with buy-to-let mortgages, which saw rates increases from 2.25% up to as much as 4.99%.
The bank says that it has identified two groups that will now remain exempt from the increase to mortgage rates: those using flexible facilities on their mortgage, and a smaller group that switched to a base rate tracker.
The former group, thought to total 1,000 customers, received documentation that could have led them to believe that the differential was constant for the lifetime of the mortgage, the bank said.
The latter group, thought to number around 200 customers, were not informed about the conditions that could prompt a change in the differential.
The bank claimed that a clause in its mortgage contracts allowed it to change the differential – the component of the standard mortgage rate not indexed to the Bank of England base rate – under certain sets of circumstances.
It said that an increase in the cost of providing the mortgages required it to substantially increase its differential, which is set to rise again later this year.
Vs. Bank of Ireland
The Treasury Select Committee asks whether the Bank of Ireland should be investigated.
Some customers are attempting to take legal action against the bank for what they consider to be unclear or unfair terms in its contracts.
But many have been thwarted by an anomaly that sees landlord mortgages fall outside mainstream regulation, which means that complaints to the Financial Ombudsman Service could fall upon dear ears.
And the Treasury Select Committee has also waded into the debate, after chairman Andrew Tyrie wrote to Martin Wheatley, then CEO-elect of the Financial Conduct Authority, asking whether there was a need to investigate for possible mis-selling by the Bank of Ireland (read more).
Keith McDonald
Which4U Editor
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