Hi can anyone help me please?
In November 2018 I contacted my bank to request a break funding fee as the offers are good at the moment. I received a break funding fee of €1139 which would last 10 days. I decided to wait until Feb 19 to switch because there was a missed payment note on my account and I wanted to ensure I had a spotless 6 month record for the next bank. In Feb I asked for another quote and it was €6,166, Since then I have been ringing up every few weeks and the fee keeps going up and up, the latest being last week were it was over €10,000.
In the documentation that supports the breakage fee they give a formula (B=(W-M)xT/12xA) Where:
B = break funding Fee,
W=Wholesale rate prevailing at the date the existing fixed rate applying to the loan was set,
M= the wholesale rate prevailing at the switching/redemption date for the unexpired time period of the fixed rate period
T= Period of time in months to the end of the fixed rate period
A=Principal amount which is subject to the existing fixed rate and which is being switched or redeemed.
I have a number of issues.
Firstly they don't call out what the "M" figure is in the documentation and i'm no actuary so this is a transparency issue for me.
Secondly when I asked for the "M" figures they sent them out to me "eventually". So the Nov "M" figure was 0.23 and the Feb "M" fig was -0.06. My next question to them was where to they get these figures from and how do I know they didn't work backwards from the break out fee to get these. They never explained this
I am no expert so can anybody explain to me if I have a case here? To me it doesn't seem like there have been massive changes in central bank rates since last November so how can the fee vary so much? At a minimum there is a lack of transparency here but is there a bigger issue around trying to lock me to them? How can they prove That the "M" figure is truly the wholesale rate prevailing at the switching/redemption date for the unexpired time period of the fixed rate period.
Thanks
In November 2018 I contacted my bank to request a break funding fee as the offers are good at the moment. I received a break funding fee of €1139 which would last 10 days. I decided to wait until Feb 19 to switch because there was a missed payment note on my account and I wanted to ensure I had a spotless 6 month record for the next bank. In Feb I asked for another quote and it was €6,166, Since then I have been ringing up every few weeks and the fee keeps going up and up, the latest being last week were it was over €10,000.
In the documentation that supports the breakage fee they give a formula (B=(W-M)xT/12xA) Where:
B = break funding Fee,
W=Wholesale rate prevailing at the date the existing fixed rate applying to the loan was set,
M= the wholesale rate prevailing at the switching/redemption date for the unexpired time period of the fixed rate period
T= Period of time in months to the end of the fixed rate period
A=Principal amount which is subject to the existing fixed rate and which is being switched or redeemed.
I have a number of issues.
Firstly they don't call out what the "M" figure is in the documentation and i'm no actuary so this is a transparency issue for me.
Secondly when I asked for the "M" figures they sent them out to me "eventually". So the Nov "M" figure was 0.23 and the Feb "M" fig was -0.06. My next question to them was where to they get these figures from and how do I know they didn't work backwards from the break out fee to get these. They never explained this
I am no expert so can anybody explain to me if I have a case here? To me it doesn't seem like there have been massive changes in central bank rates since last November so how can the fee vary so much? At a minimum there is a lack of transparency here but is there a bigger issue around trying to lock me to them? How can they prove That the "M" figure is truly the wholesale rate prevailing at the switching/redemption date for the unexpired time period of the fixed rate period.
Thanks