Here are the bits about the appropriateness of the 3.25% margin
The Complainants submit that the tracker interest rate of ECB + 3.25% that was restored to
their mortgage loan account by the Provider is “excessive”. They state that “The rate of
3.25% above the ECB rate that we have been given is ridiculous, tracker mortgages were
always in or around 1% above the ECB rate and for [the Provider] to state that this rate
would have been the rate at the end of our fixed term is crazy when as far as I can
remember they stopped offering tracker mortgages at the end of 2008.”
The Complainants wish to be put on a more “realistic rate”. They have queried the basis on
which the margin of ECB + 3.25% has been calculated as the Provider was no longer
offering tracker rates in March 2010. They assert that they have been given “a lower
variable rate mortgage and only slightly lower at that. It is not a tracker rate.”
[ptsb] details that “The applicable rate of interest which would have applied to the
Complainants’ mortgage on the expiry of the fixed term, if they had chosen to move to the
tracker rate in accordance with Special Condition 6, was ECB + 3.25%. Therefore, this is the
tracker rate which has been offered to the Complainants under the [redress programme].”
The Provider states that the Loan Offer, which was signed by the Complainants did not
contain a specific promise as to a particular tracker rate margin to be offered to them on
expiry of the fixed rate period:
“Based on the term and conditions of the mortgage entered into by the
Complainants, on the expiry of their fixed term, they did not have an entitlement to
be offered any specific margin over the ECB rate, but rather the appropriate tracker
margin rate being charged by the Bank at the time of the expiry of the 2 Year fixed
rate term.”
The Provider details that the calculation of the appropriate tracker rate margin is based on
a commercial decision made by the Provider, and is dependent on market conditions
taking into account a number of factors such as wholesale lending and borrowing rates,
interest rates paid on deposits and the Provider’s competitive position. It states that
therefore the appropriate tracker rate margin which would have been applied to the
Complainants’ mortgage in May 2010 was ECB + 3.25%. It submits that it is not correct to
say that tracker rates were always at around 1% and that this is the tracker rate which
ought to have applied to the Complainants’ mortgage.
The complaints for adjudication are:
...
(b) The Provider has incorrectly offered the Complainants a tracker interest rate of ECB +
3.25% which is excessive.
Ombudsman's decision
Special Condition 6 details as follows;
“On expiry of the fixed rate period and without affecting the entitlement of the
applicant to apply at any time to fix the rate for a further period (if available), the
interest rate applicable to the loan will be the then current [Provider] Tracker
Mortgage rate (comprising of a certain percentage over the European Central Bank
refinancing rate (“the ECB rate”)) appropriate to the loan as may be varied from
time to time in accordance with variations to the ECB rate. In the event of any
variation of the ECB rate, the revised interest rate for the loan will apply not later
Having regard to all of the evidence before me I do not accept that the Provider has failed
to apply the correct tracker interest rate margin to the Complainant’s mortgage loan
account. There is no evidence to demonstrate an entitlement to a tracker interest rate of
ECB + 0.75%. I accept that the Provider has applied the correct tracker interest rate margin
(ECB + 3.25%) to the Complainants’ mortgage loan account from July 2015 to redress the
Complainants’ mortgage loan account.