Permanent TSB threatened with action by investors
Published 15/04/2011 | 05:00
PROPERTY investors with Permanent TSB mortgages have threatened legal action after they claimed the lender was trying to force them to give up their tracker mortgages.
They claim the lender is breaching the conditions of their contracts in attempting to take their trackers off them unless they start paying the capital along with the interest.
The group, calling itself Protect Our Trackers, says around 18,000 buy-to-let investors have deals where they have a tracker mortgage.
Most of these are set at 1.1pc above the European Central Bank rate, with large numbers of the investors only paying the interest on their mortgages.
The lender has been sending out letters to those who have been on interest-only deals for three years or more, telling them to also pay the principal.
It argues that investors have commercial contracts, which allows the terms, including the tracker promise, to be reviewed.
The Protect Our Trackers group contends that the contracts are contradictory on this point. The new campaign group said it was being advised by Dublin-based solicitors Walter Odlum & Company, which has instructed a leading senior counsel.
The senior counsel's opinion is that PTSB's decision to terminate the interest-only period may constitute a breach of their agreement with customers, a spokesman said.
Investors face a tripling in their monthly payments if they have to pay the capital and the interest.
A customer who borrowed €300,000 in 2005 over 25 years, before the latest European Central Bank rate change, would currently pay €525 per month.
This repayment would rise to around €1,600, to cover both the mortgage principal and interest, staying on, if the investor kept the tracker.
The bank told those who cannot repay the capital that they can stay on interest only as long as they switch to a variable rate of 3.1pc.
A spokesman for Permanent TSB said the move was only directed at people with investment properties.
"We are entirely within our rights in doing so and will defend any actions taken on that basis," he said.