friday2018
Registered User
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- 5
The theory was that interbank interest rates were so low, they couldn't get any lower. And therefore the break fee would be minimal (if any).it would mean little or no breakage fees due to the low interest rate environment. Clearly, not so.
Unfortunately the mortgage credit directive didn't prescribe a formula, so there are some subtle differences in the calculations across the banks. However, the banks cost of funds that matters. When you fixed, the bank hedged that rate in the market. They now incur a fee to break that fix. The fact they are willing to lend new funds at a lower rate isn't relevant, as they can lend different money at that rate - it's not connected to your mortgage.Is this formula used by BOI prescribed by the EU directive or is it BOI's interpretation of the EU directive?
No. The 1% is to try keep you as a customer. If you leave, they aren't earning a margin over the next 4 years, so their 'lost profit' is actually quite high.2 As part of my mortgage offer I was entitled to 2% cashback. I would also been entitled to a further 1% cashback after 5 years (circa €4,000). Should this not be deducted from BOI's "loss" as they won't have to pay this as a result of me breaking out of the agreement?
I've never actually seen one, so I don't know how detailed they are.3 What should my approach be with BOI if they are continue to refuse to provide the detail behind the calculations?
Problem is BOI wrote to my solicitor this week and demanded a "Funding Fee" of €16,593. I rang today to query the charge and they told me it has now increased to €18,194. I asked for a breakdown of the calculation and the girl I spoke to said they would send out the method of calculation which was driven by the difference between the cost of the funds to them when they lent me the money and what they can achieve on the deposit market now. However, they would not be able to disclose to me rates they were using or their quantum.
Guys, thanks very much for the feedback - greatly appreciated.
I have received the letter from BOI now outlining their calculation and it is indeed EURIBID they use. Is there any way I can check historical movements on EURIBID so I can (a) check the calculations (b) assess likely future movements ?
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