Yes but the life of the tracker rate loan came to an end when you decided to switch to a fixed-rate product.
It most certainly did not! The interest option was changed, but the loan was still the loan. It wasn't a case that I (or anyone, for that matter) repaid the original loan and then took out another, separate loan.
The life of the loan is from the day the loan is agreed until the day the loan is fully paid/written off.
- If you change the repayment date, you don't kill off the old loan and take out a new loan.
- If you change the interest rate option, you don't kill off the old loan and take out a new loan.
- If you make an additional payment, you don't kill off the old loan and take out a new loan.
- If you take a repayment holiday, you don't kill off the old loan and take out a new loan.
- etc.
If, as you suggest, it is a whole new loan, then where are the contracts for that new loan? If you change from fixed to variable or vice-versa, do you go through the whole application process again? Are the solicitors involved? Are new contracts agreed and signed by all parties? Is the account closed and a new one opened? Of course not. You are simply changing the interest rate option as catered for in the loan agreement you signed on day one.
Restructures
can be different as, in some cases, that can involve closing the old loan and creating a hole new one to replace it. It really depends on the manner of the restructure.
It's the "prevailing" tracker rate (however determined) at the end of your fixed-rate period that matters. Otherwise, the contract would have said that you simply revert to the tracker rate that applied to you immediately prior to switching to a fixed-rate product.
But the original loan agreement could not predict what the "prevailing tracker rate" would amount to. The tracker rates are variable. They consist of the ECB rate (variable) and a fixed margin, again that is static for the life of the loan.
In any event, it shouldn't really make a very material difference to you.
It makes a huge difference.
Firstly, it has been 10 years on a loan of several hundred thousand euro. Even 0.25% over 10 years is a huge difference (without even taking compounding factors into account), that is €2,500 per €100,000 borrowed for every quarter of a percent difference. That adds up to tens of thousands for a loan of several hundred thousand when you compare a margin of 0.75% to a margin of 1.75%.
Secondly, it is the whole basis of the argument for "prevailing rates". AIB used vague terminology which they claim had no specific meaning and thus they could make up whatever margin they wanted. If, at the time of entering the loan agreement, they intended to change the margin because you fixed for a period of time, they would/should have stated this in the interest rate options, but they didn't. That would have been fine if they did - everybody would know where they stood and could make an informed decision about switching to a fixed-rate. But because they didn't, we are left with the default, simple, plain rule that the margin is fixed for the life of the loan.
Which basically leaves victims in 2 cohorts:
- The first, where they have a specific margin in their loan agreement - that is simple. It is absolutely clear what margin the customer should have been offered.
- The second, where no margin was quoted in the agreement is a little harder. On one hand, it could be argued that it is whatever margin was being offered by the bank at the time the loan was agreed. On another hand, it could be argued that it was the last margin offered by the bank before withdrawal. On another hand again, it could be argued that the margin is only agreed when a tracker rate is first entered (and thus the margin gets quoted and accepted). Unfortunately, it is ambiguous (AIB's fault for not stating clearly in the contract; the customer doesn't get to write the contract, AIB does. AIB is the expert on the matter, the customer is just a consumer). In this case, because AIB reneged on the offer of a tracker (because they had withdrawn them), the debate is over what margin would/should have been offered if AIB hadn't failed to life up to their obligations. Given that it was AIB's accidental error that the contract never clearly stated what would happen and AIB's intentional act for not offering the tracker rate when they should have and their intentional act for spending 10 years deliberately refusing to stop the fraud and resolve the situation, I would argue that the margin decided today should err very much on the side of the victim. Hell, an argument could be made that the loan should simply be written off as AIB have continuously breached their side of the contract and acted belligerently at every level and with every attempt to resolve the issue. But a decision such as that could only happen in the high court and would require a sensible and courageous judge (and would likely involve numerous appeals back and forth etc dragging on for years).