Irish tracker mortgage scandal widens

The Irish financial regulator has once again extended its investigation into whether banks have overcharged customers on tracker mortgages.

The Central Bank has confirmed that tracker mortgages that were taken out prior to 2006 will now form part of its investigation into this burgeoning scandal. This is likely to significantly increase the number of borrowers who are potentially eligible for compensation.

Pressure to include these mortgage borrowers within the scope of these investigations has come from the political party Fianna Fáil.

The Times reports that the Central Bank’s director-general for financial conduct, Derville Rowland, has said all tracker mortgage deals taken out before 2015 would now be considered.

To date the regulators have already identified almost 35,000 customers who were either denied a tracker rate or charged the incorrect rate.

This scandal – which goes back almost a decade – involves many of Ireland’s biggest mortgage lenders, including AIB, Bank of Ireland, Ulster Bank, Permanent TSB and KBC Bank Ireland.

Fianna Fáil’s finance spokesman Michael McGrath said he had been contacted by a number of borrowers who took out mortgage prior to 2006 – the start of the financial crisis in Ireland –  but had been told by their bank that they were outside the scope of these investigations.

When the Irish economy crashed, many customers asked to be switched from tracker mortgages – linked to the ECB’s main borrowing rate – to temporary fixed-rate deals. There have also been reports of banks encouraging customers to switch to fixed-rate options.

The controversy surrounds what happened when these fixed-rate deals expired, by which time the ECB had cut its main borrowing rate significantly (it is currently 0 per cent).

Most customers assumed they would be moved back to their original mortgage terms, but this did not always happen. Many were moved to variable rate loans, higher cost fixes or mortgages that tracked the ECB-rate but at a higher margin.

McGrath adds: “Fianna Fáil’s believes that customers affected by this tracker scandal have been treated disgracefully by their banks. We will continue to apply political pressure on banks, government, and the central bank until this issue is resolved satisfactorily, and fairly.”


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