Sunday 28 May 2017

Rise in number wrongly denied a tracker rate

Governor Philip Lane. Photo: Tony Gavin
Governor Philip Lane. Photo: Tony Gavin
Charlie Weston

Charlie Weston

The number of people who had tracker mortgages wrongly taken off them has risen as regulators continue to probe what has become the largest overcharging scandal in the history of the State.

The Central Bank said banks have now identified close to 10,000 cases where homeowners had low-cost trackers wrongly taken off them.

This is up by 1,700 since the last update on the probe was issued in December.

Some 100,000 of some two million mortgage accounts have been examined in detail. There are indications the final number of affected customers is likely to be higher than the current total.

Governor Philip Lane has said in the past he expects the final number to be around 15,000 mortgage accounts.

Some 15 lenders have been ordered to examine their mortgage books to see if they incorrectly took trackers off customers during the downturn.

It is estimated that around 100 people lost their homes due to the scandal, but the update does not outline how many more people ended up losing their homes.

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Only 2,600 mortgage holders have had refunds and compensation paid to them so far, the Central Bank said in an update on the tracker redress scheme.

The amount paid out in interest refunds is just €78m so far. The final figure could be as high as €500m.

People identified by their lender as having wrongly lost a tracker will be put back on the lower rate.

The monthly savings from this can be €500.

They are also due refunds of the over-charged interest and a compensation payment, usually 10pc of the refund.

The average redress and compensation is around €30,000.

Only nine of the 15 lenders have so far submitted reports outlining their review of their mortgage books.

Banks have been given until September to have these reports sent into the Central Bank.

But it may take longer for refunds to be paid.

People who lost trackers tend to be homeowners who opted for a fixed rate for a period. They expected to be put back on the tracker rate, but were either not allowed to or were unaware they could return to the tracker rate at the end of the fixed period.

Enforcement action has seen sub-prime lender Springboard fined €4.5m, with Ulster Bank and Permanent TSB admitting they are facing fines also.

Other banks may face enforcement action, it is understood. Actions against individuals have not been ruled out by regulators.

The Central Bank report also outlines how banks had been ordered to restore 7,100 mortgage accounts back to tracker rates before the current probe of 15 lenders began.

This means the total number who will have been restored to a tracker is likely to top 22,000.

Tracker rates are as low as 0.5pc, with many paying just 1pc in interest. Variable rates range from 3pc to 4.5pc. This means repayments can be €5,000 a year lower on a tracker than a variable.

Irish Independent

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