# Advising people to fix their mortgage rate was good advice!



## Palerider (19 Oct 2017)

I appreciate my comments will not be appreciated by many, as a former coal face banker let me say to advise a customer to fix their mortgage during a period of sustained low rates was good advice, not independent advice which was available to the customer just good advice.

At the end of the lock period, three years in most cases, history will confirm that rates had risen, restoration of the tracker at the previous rates was not possible for obvious reasons, options available at that time were advised to the customer and that customer made a decision.

During 1992 I recall seeing one customer refusing to leave the branch until I could guarantee in writing a rate of 16%, absurd now but there you are.

Some personal responsibility is in my view warranted in many cases.


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## notabene (19 Oct 2017)

@Palerider in many Ulster Bank cases the words for the life of the mortgage along with a specified rate are gauaranteed in the mortgage document, a new one was not issued upon fixing. There is nothing in the documentation to say you will lose your tracker if you fix. This is also exactly what was being said by the bank & their agents, the brokers. 

What did happen is that banks were gambling on mortgages by borrowing for 6 months at a time instead of borrowing for the full term of the mortgage and when the markets tightened leaving them unable to get cheap money they then decided to defraud their customers to make up the money - this is what happened so where does the customer's personal responsibility come in there?


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## SaySomething (19 Oct 2017)

Not only was there nothing in the mortgage contract about fixing changing your right to a tracker rate, there was nothing to notify us in the fixed rate authority we signed either. Not disagreeing that fixing at the time was a prudent decision, however refusing the contractual entitlement to a tracker rate on exiting the fixed rate because 'they're no longer available' is sharp practice at best.


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## Brendan Burgess (19 Oct 2017)

Hi Palerider

I agree with a lot of what you say.

There is a myth out there that the big bad banks tried to get people off tracker mortgages by encouraging them to fix.  This is nonsense for many reasons.

They were still offering cheap trackers when many of the people fixed 

At the time, neither the lenders nor the customers understood the value of cheap trackers - if they had, the lenders wouldn't have offered cheap trackers and the borrowers wouldn't have given them up so easily

Both the lenders and the borrowers just assumed that cheap trackers would be available when the fixed rate expired 

Most of the people who fixed did so proactively. They were spooked by the possibility of high rates and fixed their mortgages.
So borrowers chose of their own free will to fix. 

The difficult area is that because the lenders did not appreciate the value of cheap trackers, it didn't occur to them to offer a warning - if you fix your rate, you will lose your tracker.

They did generally say : After your fixed rate ends, you will default to the "variable mortgage rate" or "the prevailing tracker rate" or something else.

In some cases, it is clear to me from the Fixed Rate Agreement, that the person would be going onto the SVR. These people have no claim for a restitution of their tracker, in my opinion.

In many cases, it was not clear. In those cases, they have a good argument that they should have reverted to their tracker rate.

Brendan


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## Brendan Burgess (19 Oct 2017)

Palerider said:


> At the end of the lock period, three years in most cases, history will confirm that rates had risen, restoration of the tracker at the previous rates was not possible for obvious reasons



I would disagree with this in many cases. Some of the Fixed Rate Agreements said "on expiry of the fixed rate period you will be put back on the tracker at the then prevailing rate.".  Although ptsb no longer offered trackers to new customers, they did put the existing customers onto trackers at the prevailing rate. AIB said "Sorry, we no longer do trackers". That was wrong and they should have offered trackers to these customers at the prevailing rate.


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## Monbretia (19 Oct 2017)

I agree in general with what has been said above as a previous banker too, I gave best advice available at that time, however the trackers I personally saw issued were for life of loan and on expiration of fixing they did automatically revert back to what they came from unless the customer opted for another fixed.  But somewhere along the line someone had to issue an instruction to IT to change the defaults on those products so that they did not automatically go back to where they started which was a tracker rate.

It is true that new loan offers were not issued on fixing and certainly in my years the fixed rate appendix forms mentioned nothing about afterwards, I can't remember exact wording at this stage but there certainly was nothing about removing the tracker or reverting to standard variable.  Now obviously banks differ so can only speak for the one I worked for.  

As Brendan says too there was absolutely no attempt to get people off trackers at branch level anyway (where I worked) up until I left in 2010.  I was watching the programme last night and was just saying to the person with me that I rang many people after trackers started offering a switch from SVR to tracker and many declined, they were happier to say with what they knew and what had been traditional.  People are happier with the familiar in a lot of cases.

But I have to say I am so glad I am not in banking now and in fact probably would not have lasted anyway as I could not condone what has gone on, I helped several people write to the bank re their trackers after I left and when things started to go wrong, loan offers that I had issued and that most definitely should have defaulted to tracker rate.  They all got them back apparently as a one off and without prejudice sort of letters, bank knew they were caught out in other words but then obviously decided to dig their feet in on the subsequent deluge!


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## Brendan Burgess (19 Oct 2017)

The Bank of Ireland staff trackers is interesting 

1) They switched from trackers to non-trackers in January 2007 
BoI was still issuing trackers, so they obviously did not realise what a terrible product it was for the bank.
1,800 banking staff availed of it, so they clearly did not understand the value of trackers to them. Don't forget, these were banking staff - not unskilled labourers. 

2) This is what these 1,800 bankers signed 

"In converting the loan to a Staff Mortgage loan, I agree that the interest rate applicable to the loan is a variable interest rate and may vary upwards or downwards. The rate shall be the higher of the following two key indicators (1) the prevailing Revenue Commissioners BIK ( benefit in kind) reference rate (2) the one month Cost of Funds reference rate (which is equivalent to the one month EURIBOR rate issued by Bank of Ireland Global Markets on a daily basis). In the event that the Staff Mortgage Rate is certified by the Society to be unavailable for any reason the interest applicable to the loan shall be the prevailing Home loan Variable rate. Notification of any change in the interest rate with condition 6(b) of The General conditions of my original offer letter."

and
Condition 6(c) of the general conditions of my Original Offer Letter is not applicable for the duration of the loan when the interest rate is the Staff Mortgage rate.

Condition 6(c) :notwithstanding anything else provided in this Offer Letter, the varied applicable interest rate shall never, in any circumstances, be less than 0.1 per cent over one month's money at The Euro Inter Bank Offered Rate (EURIBOR)


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## Jespie1 (19 Oct 2017)

The fixed rate form for Ulster confirmed that after the fixed rate period the rate would revert to the home loan rate. On looking back on the loan offer the homeloan rate was  confirmed as the tracker rate in my case being 1.05% above the ecb. So I always thought I would revert to tracker rate


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## Palerider (19 Oct 2017)

Many people have been severely impacted by what has happened, many more have not but claim to be, it seems fashionable to blame the Bankers for almost everything and to grant personal absolution to yourself for any part you may have played to any variation to your mortgage that you agreed to.

If I had a contract with the Bank that said I could revert to a tracker at expiry of my fixed rate period at cost of funds plus a margin then I would have insisted that be honoured or I would see them in Court.

Contracts are enforceable.

What surprises me is that the legal profession who are not slow about seeing a gap where they might earn a crust are not actively seeking out clients that have not received their contractual entitlement, I am thinking of Army deafness cases and PPI cases in the UK as two examples.

The point already made but worth a repeat is that nobody Bank or Customer really knew the value of the tracker, only time has confirmed that inherent value but where were the complaints and the court cases at the time of the fixed rate expiry if the contract was clear.


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## Monbretia (19 Oct 2017)

Re BofI staff nobody in branchland anyway at that stage knew the value of trackers and even bank workers are not always expert in every bank product other than the sales training they get, unless you  actually worked in mortgages then you might not know much more than an unskilled labourer.   

I have a tracker but more by chance than anything else as I wanted the offset mortgage and it only came in tracker form, the tracker part was not the attraction.  In fact the inability to switch to fixed from an offset was the biggest problem in trying to convince people what a good mortgage they were,  people don't like change, they want the familiar.


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## Andy836 (19 Oct 2017)

Palerider said:


> ........................
> 
> Some personal responsibility is in my view warranted in many cases.



LOL. "Personal responsibility". That's not a common thing in Ireland


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## Jammbolge (19 Oct 2017)

Hi
I'm not sure I agree 100% with this statement. I had a tracker in 2008 in August the bank called us for a meeting in with we were assured fixing the mortgage would be the best decision. We agreed as they are the specialists in this area. 3 weeks later trackers were taken off the market. I discovered we could not go back on the tracker and made written complains and was dismissed I even discovered the advisor we were dealing with was not qualified. Not everyone has the same experience with this issue


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## Palerider (19 Oct 2017)

If as a staff member and a good customer you were clear from reviewing your documents that you were on solid ground then you should have raised a stink internally and if necessary externally.

This is not just hindsight and cannot be dismissed as such, it is what anybody that has a valid contract should do where there is a breach in the contract, in fact any contract.

You mentioned Ulsters paperwork, generally when reference is made to reverting to the home loan rate it means the standard variable rate at that time, not a tracker.

Since I posted earlier this afternoon it seems the Central Bank has indicated that people should progress their entirely valid complaints via a lawyer or the Ombudsman.

What Im wondering is where have all the lawyers been on this for the past few years. This is as good a class action as you can get in Ireland with almost 20000 borrowers impacted according to the Central Bank Boss this afternoon.


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## peemac (19 Oct 2017)

I totally disagree with the op - people were encouraged to fix for a fixed period.  The flyers screamed out 2 years / 3 years. 

It gave the specific date too

"tick this box to fix at 3.69% til 1st Oct 2009"

Then in tiny print it says "you will REVERT to the standard homeloan variable rate"


The ONLY variable rate product available at the time was a variable rate connected to the ecb rate - known as a tracker.

There was no glossary saying what a "standard homeloan rate" actually was. But that came later in 2009 - so wording on a flyer in 2006 only had a specific meaning in 2009.

And you think the banks are not really to blame?


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## Jespie1 (19 Oct 2017)

Palerider said:


> If as a staff member and a good customer you were clear from reviewing your documents that you were on solid ground then you should have raised a stink internally and if necessary externally.
> 
> This is not just hindsight and cannot be dismissed as such, it is what anybody that has a valid contract should do where there is a breach in the contract, in fact any contract.
> 
> ...


Pet if only you knew what it was like to work there. I'll leave it at that


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## Monbretia (19 Oct 2017)

I don't what bank those flyers were from or the wording etc but I know that when we had a push on fixing it was to do with retention, as people were switching lenders left right and centre the best way to ensure you had them for a few years and they couldn't switch (without paying a breakage penalty) was to get them on fixed.   

Although I am sure banks differed so obviously can't speak for them all.


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## moneymakeover (20 Oct 2017)

I agree @Palerider why not more legal action?

What ever happened to Ross Maguire?

https://www.pressreader.com/ireland/the-irish-times-business/20150901/281496455045658


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## moneymakeover (20 Oct 2017)

Some lawyers thinking bringing legal cases
From today's Irish Times

Niall Kiernan of Lawlor Partners
Coleman Legal
McHale Muldoon


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## todo (22 Oct 2017)

Jammbolge said:


> Hi
> I'm not sure I agree 100% with this statement. I had a tracker in 2008 in August the bank called us for a meeting in with we were assured fixing the mortgage would be the best decision. We agreed as they are the specialists in this area. 3 weeks later trackers were taken off the market. I discovered we could not go back on the tracker and made written complains and was dismissed I even discovered the advisor we were dealing with was not qualified. Not everyone has the same experience with this issue




Hi Jammbolge,

Which bank called you in to get you to fix?


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