Caroline Grierson, a mortgage and protection adviser at Mortgage Buyers Advice Centre in north Wales, operates a property business alongside her advice business and is one of 13,500 customers affected by the Bank of Ireland’s rate increase.
The bank wrote to customers last week advising them that the differential would be rising on residential and buy-to-let mortgages resulting in increased rates.
Two of Grierson’s mortgages have been affected by this rise. Both were taken out in the summer of 2003 through the former Bristol & West Building Society, which was subsequently acquired by the Bank of Ireland.
The move will see her tracker rate move from Bank Base Rate + 1.75% to BBR + 4.49%, more than doubling her monthly payments. Grierson told Mortgage Solutions that she feels the move is underhand.
“I feel cheated by the fact they’ve put it up because in my mind a tracker rate tracks at a certain level above base, and that’s it. I’ve thought that for the whole of the last ten years.”
She says that in the past she had considered moving these mortgages but, having taken out seven mortgages with the lender between 2001 and 2007, decided to stick with the Bank of Ireland because it offered stability. Now, with the housing market looking less healthy, she is unable to move her mortgages elsewhere.
Grierson’s seven properties are all three bedroom terraces located in north Wales and she adds that if all of her mortgages had increased it would have put her rental business in jeopardy.
The Intrinsic-affiliated adviser has already suffered rate increases on another of her mortgages last year when she was one of 100,000 customers affected by an SVR increase.
Grierson says she has never had any problems with arrears or made a single late payment and feels she is paying for mistakes made by the bank.
“They said that they have to hold bigger capital reserves now but they are taking it out on the people who have paid their mortgages on time and it is not my fault they haven’t got enough capital reserves.
“But it isn’t just the rise; it’s the amount they’ve put it up by. To go from BBR + 1.75% to BBR + 4.49%, how can they justify putting it up by that much? I am going to complain to them and the ombudsman about this being an unfair term.”
“They might say I should have read the contract and understood it better but then is it fair the amount they’ve put it up by? What about the people who are already paying £500 a month?”
Mortgage Solutions contacted the Bank of Ireland and the lender said all potential changes were detailed in the contract: “This clause was clearly referenced in the pre-sale offer document provided to the customer and the customer’s intermediary prior to completion (at the time circa 90% of new business sales were through an intermediary).”
The bank also confirmed that it undertaken an ‘extensive program of analysis’ and had engaged with the FSA before making changes.
Grierson adds: “I would never have looked for or realised what this condition meant. I wasn’t a mortgage adviser in 2003 but I had a lot of experience of buy-to-let and had held a buy-to-let portfolio since 1998.”
She also feels that the bank using this as a reason to increase rates, while simultaneously lending significant amounts through the Post Office in the UK is unfair.
“It is hard to believe they are in difficulty when they are doing what they are doing through the Post Office. You get a letter to say they are not holding capital reserves and then they are still doing mortgages through the post office.
“But I don’t think that there’s a lot I can do to stop them doing this, I’m just going to be worse off.”