Thursday 23 November 2017

Thousands of homeowners to get trackers back at last

Move worth up to €500 a month plus a refund of €20,000 for those unfairly switched to higher rates

Getting restored to a tracker rate will see repayments coming down by around €330 a month typically. Getty Images
Getting restored to a tracker rate will see repayments coming down by around €330 a month typically. Getty Images
Charlie Weston

Charlie Weston

Thousands of homeowners who had their tracker mortgages taken off them by their bank are due to get a Christmas present by being restored to the lower rates.

Central Bank regulators ordered an industry-wide probe of a suspected 10,000 cases across all banks where people lost trackers during the downturn.

Now the first batch of 2,000 Ulster Bank customers is to be written to from next month telling them they are being put back on trackers - and that they are due refunds in the new year.

AIB is also restoring 3,300 customers to tracker rates, and is due to outline details to them in the coming weeks about refunds and compensation.

Refunds of around €20,000 are set to be paid out by AIB, experts said. Compensation amounts of around €3,000 are likely in typical cases.

Bank of Ireland and KBC are also understood to be close to putting people who lost trackers back on the low rates.

Getting restored to a tracker rate will see repayments for those affected coming down by around €330 a month for a typical borrower.

People on tracker rates pay on average €4,000 less a year on a €200,000 mortgage than those on a variable rates.

Many who lost trackers are boom-time borrowers with even bigger mortgages, so the savings will be likely to be €500 a month.

The industry probe came about after Permanent TSB admitted it had unfairly taken away 1,400 of the low-cost mortgages in the summer of 2015.

Ulster Bank is understood to have more than 2,000 customers due to get lower tracker rates.

Some of these took out mortgages with First Active, which has since been integrated into Ulster Bank.

All of those affected will be initially restored to tracker rates.

Early next year Ulster Bank will again write to these customers outlining how much they are due for years of being overcharged on their mortgages, it is understood.

Compensation payments will also be outlined. This is likely to amount to around 15pc of the interest that was overpaid when customers were denied their tracker rate.

The Ulster Bank variable rate is 4.3pc. Most tracker rates at set at around 1pc over the European Central Bank rate - which means an effective rate of 1pc as the ECB rate is 0pc.

Compensation

AIB is also close to writing to some 3,300 homeowners it is restoring to trackers with details of refunds they are due for overpaying, and outlining compensation amounts.

These letters are due to start going out in the next two to three weeks, and include EBS customers.

The bank is set to offer refunds for interest overpayments, compensation of 15pc of the refund, and up to €600 to pay for independent financial advice.

All the banks also have to set up an independent appeals system.

Bank of Ireland is understood to have around 1,800 cases, while KBC has around 1,000 tracker cases, according to Pádraic Kissane, who specialises in tracker restoration cases.

AIB, Ulster Bank, KBC and Bank of Ireland would only say they were engaged with the Central Bank on the tracker restoration issue.

Irish Independent

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