Cost of funds with Bank of Ireland

A client was telling me today of a letter he got from Bank of Ireland 3 years ago.

He has 2 trackers and was paying them fine. In 2011, he got a letter from them saying that because of the cost of funds in borrowing from the ECB, there were now increasing the rate on his tracker. They said it was in the terms of the contract that they could do so. He is now paying an additional 1% in interest.

Did anyone else get a similar letter at the time? And was there any way of fighting it?


Steven
www.bluewaterfp.ie

Hi Steven

Did he tell you that, or did you see the letter for yourself?

There are two possible explanations

1) He has a commercial mortgage which is linked to Euribor or their cost of funds, and not to the ECB.

2) He is based in the UK where the Bank of Ireland subsidiary, trades under a different name, did invoke the clause which allowed them to reprice trackers in exceptional circumstances.

Brendan

Hi Brendan

It's the first one.

Thanks for clearing that up. I knew I'd find the answer here.

Steven

I spoke to my client about this and he told me that both mortgages tracked the Euribor rate until November 2011 when they increased.

I haven't seen the letter but he told me BoI cited "cost of funds" as the reason to increase the rate.