Thursday 19 October 2017

Tracker mortgage scandal grows as 20,000 affected

'The local authority pays most of the rent to iCare. At any time in the 30 years, the family can buy back their home from iCare at the discounted price iCare paid the bank' (stock photo)
'The local authority pays most of the rent to iCare. At any time in the 30 years, the family can buy back their home from iCare at the discounted price iCare paid the bank' (stock photo)
Charlie Weston

Charlie Weston

The tracker mortgage scandal is set to widen again.

A leading expert now expects 20,000 homeowners to end up being restored to trackers and compensated, after being charged the wrong interest rates.

Up to now it was thought that 15,000 mortgage holders were affected, but there are at least 5,000 more victims.

It comes as the Central Bank is due this month to issue an update on the efforts by banks to restore trackers holders to the correct rates, and compensate them.

At the end of 2015, the Central Bank ordered 15 lenders to trawl through their mortgage books to seek out all those who have been overcharged.

Most customers have been restored to the correct tracker rate, but the majority of banks have yet to refund homeowners the overcharged interest and compensate them.

Financial consultant Padraic Kissane
Financial consultant Padraic Kissane

The tracker mess has been described as the largest financial scandal to hit this country. At least 100 mortgage holders lost their homes because of the tracker rate issue. Tracker rates are set at a percentage over the European Central Bank, and tend to be far cheaper than variable or fixed rates.

Now a financial consultant, who has been advising individuals wrongly moved off tracker rates has said he expects the next update from the Central Bank to reveal that at least 20,000 homeowners have been hit by the scandal.

Padraic Kissane said: "The current figure is 15,000, but it will rise to 20,000 and could pass that."

Most banks have restored affected customers to tracker rates, but only AIB, EBS and Permanent TSB have also refunded them over the overcharged interest and compensated them, Mr Kissane said.

However, he claimed some Bank of Ireland staff members had not been restored to the low interest home loans they were entitled to be on. As many as 2,000 Bank of Ireland staff had been incorrectly moved off tracker rates at one point.

Bank of Ireland insisted anyone entitled to a tracker has now got it back.

Fianna Fáil's finance spokesman Michael McGrath has written to Central Bank governor Philip Lane calling on him to take a tougher line with banks on the issue.

"As far as we are aware, the vast majority of customers who had been placed on the wrong rate of interest have now been put on the correct tracker rate," he said.

But Mr McGrath said the delay in paying customers back the money they were overcharged and paying them appropriate compensation was completely unacceptable.

"Can you imagine if the shoe was on the other foot and the bank realised it had been undercharging a customer for years? I don't think it would be so shy in seeking its money back."

Irish Independent

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