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Bank 'tricking' customers on loans -- TD

SOME banks are trying to "trick" customers into switching to costly fixed rate mortgages, it is claimed.

Bank of Ireland wrote to homeowners asking them if they would like to switch to fixed-rate loans.

The tracker mortgage is linked to European Central Bank rates, which have been at an historic low.

However, the bank said that customers could consider protecting themselves against future rate increases and switch to a fixed rate.

The bank quoted the results of a RedC survey that found many people were concerned about rising interest rates.

And it suggested that anyone with such worries should contact the bank for advice, which could include switching to a fixed-rate deal.

There were heated exchanges over the issue at a hearing of the Joint Oireachtas Finance Committee.

A customer with a €200,000 home loan who is currently being charged 2pc interest on a tracker deal would pay an extra €4,800 a year if they switched to a 4.5pc fixed-rate mortgage.

Bank of Ireland's tracker rate ranges from 1.75pc to 2.75pc, the committee was told.

The bank's fixed interest rates are between 4.3pc and 4.5pc.

Labour TD Kevin Humphreys questioned Bank of Ireland officials on the practice.

"I put it to you that you are trying to trick people off tracker mortgages," he said.

But senior executive Liam McLaughlin insisted that the bank had "no intention to trick" customers. He said the letter had been sent out as part of research done by the bank.

This will find out the extent of customer demand for fixed-rate deals.