Bank of Ireland is writing to 13,500 of its buy-to-let and residential customers on tracker mortgages to warn them of plans to more than double the base rate differential it charges them.
Around 7 per cent of Bank of Ireland UK mortgage customers will be affected by the changes to the interest rate differential, over 50 per cent of which are buy-to-let holders.
For buy-to-let borrowers, the rate will jump from Bank of England base rate plus 1.75 per cent to rate plus 4.49 per cent from 1 May.
For residential borrowers, the increase will be applied to in two separate stages. From 1 May, it will rise from base plus 1.75 per cent to base plus 2.49 per cent. From 1 October, it will then be subject to yet another increase, taking it to base plus 3.99 per cent.
A statement from the bank argues the increases reflect higher funding costs.
It says: “This change reflects the significant increase in the cost of funding these mortgages since 2008 and the need for banks to maintain greater levels of capital.”
One industry commentator remarked “This is a shocking move by Bank of Ireland. It shows a blatant disregard for the fortunes of its customers. It is all very well offering to waive redemption penalties for those who can move but, for those who cannot, it creates unnecessary issues and will surely breach boundaries of the FSA’s Treating Customers Fairly initiative.”
If you are concerned about this , please feel free to get in touch.
As always , thanks for your attention.
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