Tracker Rate Doubles Is Your Rate Safe

Tracker Rate Doubles Is Your Rate Safe.

Bank of Ireland has confirmed that it is making an unprecedented move by increasing interest rates for all its trackers mortgages from 1 May, 2013.

Just under one in ten mortgages with Bank of Ireland are Bank of England base rate trackers and clearly Bank of Ireland is losing money.


Residential mortgage base rates at set at 1.75% over base, with base rates at 0.5%, this is just a 2.25% pa mortgage pay rate.  They are increasing their rate to 2.49% over base, meaning mortgage borrowers will see their rate increase to 2.99%.  Bank of Ireland have also confirmed a further increase in October to 3.99% over base.  With base rates currently at 0.5%, this would be a rate of 4.49%, doubling what people current of 2.25%.

Buy to Let mortgages, of which 50% of Bank of Ireland’s book is, currently have rates of 1.75% over base, a real rate therefore of 2.25%.  These are increasing to 4.49% over base meaning a real pay rate of 4.99% on current base rates.  This is more than doubling the rate.


Our view
A totally unprecedented move, which will shake the confidence of all borrowers and mortgage advisers.  We suggest this will mean people are reluctant to even consider Bank of Ireland in the future.  Many Post Office mortgages are actually Bank of Ireland backed mortgages and these have been confirmed as not affected at this stage.  Why? We assume they cannot risk losing the contract.  However, in the interests of treating all clients fairly, we suggest this is not.  

You cannot increase one portion of your client base and not the other.

Is it legal? Yes.  In the small print of all mortgages, there will be clauses to allow banks to increase rates, if market conditions dictate this.  
Speculation is mounting that the Bank of England, may reduce interest rates, again forcing Bank of Ireland’s hand, and possibly we will see more tracker rates come under attack.


If you need mortgage advice, contact us.