Lenders deny claim they're seeking to alter tracker mortgages
Published 16/04/2010 | 05:00
THERE were warnings yesterday that some lenders may be examining tracker mortgage contracts to see if they can find ways to raise rates ahead of any changes in the European Central Bank rate.
Tracker mortgages are based on a commitment by lenders to only increase rates when the ECB moves its rates.
However, head of Compliance Ireland Peter Oakes warned that lenders' lawyers are looking at tracker contracts to see if they can find ways to change the terms of tracker deals.
He says the question really was whether any of the banks that have ECB tracker rates will try and look at the fine print of the mortgage contracts which might allow them some "wriggle room", Mr Oakes said on RTE's 'Morning Ireland'.
A number of lenders contacted yesterday, which have large numbers of trackers on their residential mortgage books, dismissed the reports that they were planning to tamper the promise to only move rates on trackers when the ECB moves.
As revealed in the Irish Independent yesterday, KBC Bank Ireland has confirmed that it is to increase its mortgage rates for new and existing customers.
The bank said it would increase its standard variable mortgage rate for owner occupiers from 3.24pc to 3.65pc from May 1. For investors, the standard variable rate will increase from 4.29pc to 4.5pc.
The bank is also bringing in a discounted variable rate for new home buyers, which will be 3.1pc for the first two years of the mortgage term.
KBC is also raising some of its fixed rates from Monday, but it says this will not apply to existing fixed-rate customers for the rest of their term.
Ciaran Phelan, of the Irish Broker Association, said the moves by lenders to hike their rates comes just as consumer confidence is starting to show signs of recovery. "When it comes to increasing profit margins, consumers appear to be fair game for our banks, though at least KBC are actually open for new business, in stark contrast to most other institutions."