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Bank of Ireland: Andrew Tyrie writes to FSA over rate rise | Bank of Ireland: Andrew Tyrie writes to FSA over rate rise |
(2 days later) | |
The chairman of the Treasury Committee has written to financial regulators about Bank of Ireland's plan to raise customers' mortgage tracker rates. | The chairman of the Treasury Committee has written to financial regulators about Bank of Ireland's plan to raise customers' mortgage tracker rates. |
In a letter to the Financial Services Authority, Andrew Tyrie said he was "very concerned" and asks if it was a case of product mis-selling. | In a letter to the Financial Services Authority, Andrew Tyrie said he was "very concerned" and asks if it was a case of product mis-selling. |
Despite the Bank of England base rate remaining at 0.5%, Bank of Ireland is almost doubling its tracker rate. | Despite the Bank of England base rate remaining at 0.5%, Bank of Ireland is almost doubling its tracker rate. |
Bank of Ireland, which owns Bristol and West, said it had no comment. | Bank of Ireland, which owns Bristol and West, said it had no comment. |
About 13,500 mortgage borrowers with Bank of Ireland and Bristol and West will see the cost of their home loan rise. | About 13,500 mortgage borrowers with Bank of Ireland and Bristol and West will see the cost of their home loan rise. |
It has the power to change the interest on these home loans, even if the Bank rate does not move. But mortgage brokers have criticised the move. | It has the power to change the interest on these home loans, even if the Bank rate does not move. But mortgage brokers have criticised the move. |
Bank of Ireland blamed the rising cost of providing these mortgages and new rules on the amount of capital it must hold in reserve. Banks must hold a higher buffer of capital to a certain level in order to keep to European rules. | Bank of Ireland blamed the rising cost of providing these mortgages and new rules on the amount of capital it must hold in reserve. Banks must hold a higher buffer of capital to a certain level in order to keep to European rules. |
From 1 May, the bank will raise the mortgage rate for residential customers from, typically, the Bank of England rate plus 1.75%, to the Bank rate plus 2.49%. | From 1 May, the bank will raise the mortgage rate for residential customers from, typically, the Bank of England rate plus 1.75%, to the Bank rate plus 2.49%. |
It will then raise it further, to Bank rate plus 3.99%, on 1 October. Buy-to-let customers will see their rate increased to Bank rate plus 4.49% on 1 May. | It will then raise it further, to Bank rate plus 3.99%, on 1 October. Buy-to-let customers will see their rate increased to Bank rate plus 4.49% on 1 May. |
Mr Tyrie's letter, to FSA managing director Martin Wheatley, asks "what action the conduct arm of the FSA will be taking in response to the action by the Bank of Ireland". | Mr Tyrie's letter, to FSA managing director Martin Wheatley, asks "what action the conduct arm of the FSA will be taking in response to the action by the Bank of Ireland". |
He sent a list of questions to Mr Wheatley, including: | He sent a list of questions to Mr Wheatley, including: |
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Mr Tyrie, who also chairs the Parliamentary Commission on Banking Standards, has given the FSA until Monday to respond. | Mr Tyrie, who also chairs the Parliamentary Commission on Banking Standards, has given the FSA until Monday to respond. |
Last week, Andrew Montlake, of mortgage broker Coreco, said: "This is a shocking move by the Bank of Ireland and, it could be argued, shows a blatant disregard for the fortunes of their customers," he said. | |
"One of our clients has been hit with a sudden rise of 2.74% on a rental property that was ticking along nicely, which increases payments by £776 per month. | "One of our clients has been hit with a sudden rise of 2.74% on a rental property that was ticking along nicely, which increases payments by £776 per month. |
"It is evident that they want to reduce their back book and dispense with clients they do not see as profitable, but there must be a less dramatic way to do this." | "It is evident that they want to reduce their back book and dispense with clients they do not see as profitable, but there must be a less dramatic way to do this." |