AIB claims that the prevailing tracker rate would have been 7.9% for a PDH!

Discussion in 'Tracker Redress' started by Brendan Burgess, Mar 23, 2018.

  1. Brendan Burgess

    Brendan Burgess Founder

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    Someone sent me this letter received this week from AIB.

    upload_2018-3-23_11-57-22.png

    I know that they had quoted different rates, but I had not seen a rate as high as this before.

    It makes a mockery of the idea that they were charging a fair prevailing rate.

    What other rates have you been told about in your letters?

    Brendan
     

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  2. Brendan Burgess

    Brendan Burgess Founder

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    I strongly believe that AIB cannot set the rate retrospectively. The prevailing rate should be the last rate which they charged before they stopped doing trackers for new customers.

    But even if that argument fails, then the only other source of a prevailing rate would be what the market was offering. This is what ptsb offered.

    upload_2018-3-23_12-1-22.png
    How can AIB argue that the prevailing rate at the end of 2008 would have been 7% when ptsb were charging 1.68%?

    This argument won't help those who came out of fixed rates after 31 August 2009.

    Brendan
     
  3. tiv

    tiv Frequent Poster

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    I think it's a standard letter. Will check mine later.
     
  4. reggie3234

    reggie3234 New Member

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    I got a letter 2 weeks ago with sames rates listed in yellow 7.9% and 9% BTL
     
  5. moneymakeover

    moneymakeover Frequent Poster

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    Let's be clear about what prevailing means

    It's the ECB rate at the time

    Otherwise it's a joke

    The intention when contracts were issued were two factors:

    ECB rate (variable)
    Margin (fixed)

    Let's not entertain the idea proposed by Aib (and ptsb) that when a customer fixed he gave up any control over the rate to some imaginary prevailing rate!

    Especially you Brendan!
     
  6. Jim Stafford

    Jim Stafford Frequent Poster

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    Brendan

    We have a number of clients who received similar letters quoting the same rates. It is simply puzzling how AIB arrived at those rates!

    Jim Stafford
     
  7. gnf_ireland

    gnf_ireland Frequent Poster

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    @Brendan Burgess do you know if the 7.9% is the total rate or the mark-up over ECB rate? In post 2, you apply it is the mark-up over ECB which seems absolutely crazy? I would have read the line as the tracker rate (ECB + mark-up) would have been 7.9%.

    Do you have any idea what the cost of funds was for AIB during this time? Is it possible there is a correlation between them?

    I think the only fair way that anyone can retrospectively apply a rate, given the circumstance is to perform the following calculation
    In 2006/2007 (when tracker rates were still available) the cost of funds was x - ECB was y and the margin was z. The calculation for margin over ECB was a%
    In 2008, the cost of funds was x - ECB was y and the margin was z. The calculation for margin over ECB was a%
    In 2009, the cost of funds was x - ECB was y and the margin was z. The calculation for margin over ECB was a%
    In 2010, the cost of funds was x - ECB was y and the margin was z. The calculation for margin over ECB was a%

    So in effect, issue the formula and the associated pattern, and then publish this as to how they came up with the rate. If the rate is still 'off the charts' they should be asked to support the same formula for their fixed and variable rates, and there should be some level of correlation between them.

    Otherwise, any rate made up in hindsight is absolute nonsense ..... especially if it has no bearing to the other rates published at the time.
     
  8. Brendan Burgess

    Brendan Burgess Founder

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    This is how AIB explained it in their booklet

    upload_2018-3-23_14-58-39.png

    upload_2018-3-23_14-59-6.png

    upload_2018-3-23_14-59-52.png
     
  9. reggie3234

    reggie3234 New Member

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    Article by Charlie Weston in independent today about Aib accused of misleading customers on mortgages.

    To quote last paragraph, “asked if it (central bank) stood over letter claiming tracker rates could have gone to 7.9%, the CB said the AIB customers would not be getting any refunds if it had not intervened on the issue”

    God bless you CB for doing your job, thanks for the shiny penny...
     
  10. Brendan Burgess

    Brendan Burgess Founder

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    reggie

    Let's be absolutely clear on the role of the Central Bank. They are not the final judge on this issue.

    AIB sets out its position and provides legal opinion to back it up. The Central Bank can question this. It can challenge it. But it can't direct them to give cheap trackers to people whom AIB say are not entitled to them.

    It was AIB's firm position that these borrowers were not affected and so they would not even be written to.

    The Central Bank has at least got them into the system. 4,000 borrowers are now aware that there is an issue

    These borrowers can now get together and take legal action to determine if it's ok for AIB to set the prevailing rate 5 years later.

    By the way, anyone who is affected can go to the FSO who does have the power to issue a judgement on this issue.

    Brendan
     
  11. IdesofMarch

    IdesofMarch Frequent Poster

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    Brendan,

    The AIB letter does not stand up to scrutiny, AIB's own standard variable rate never got near 7.9% during the height of the bust, so why would costing a tracker mortgage increase to these dizzying heights? The letter is frankly nonsense.
     
  12. Markls15

    Markls15 New Member

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    Last edited: Apr 11, 2018
    .
     
    Last edited: Apr 11, 2018
  13. David_Dublin

    David_Dublin Frequent Poster

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    Hi folks.

    In 2018 I took out a mortgage with AIB, borrowed 600k, decided to go for 300k on tracker, and 300k on 3 year fixed, so a split mortgage. So I know that the actual tracker they had was way below what they are saying a tracker would have been.

    I also remember calling them before the fixed mortgage expired asking them if I was entitled to or could be put on a tracker rate, and was told no. Details of what they actually said are hazy as it is ages ago, but I have sent off a subject access request to them with a bank draft for 6.35 euro to see try to get all info related to accounts they have with me. I'll also send off for the appeals application pack that they refer to in the booklet.

    It seems laughable to claim that while they were obliged to offer a tracker, that the tracker rates would have been so far above what their actual tracker was, and what their standard variable was.

    If anyone has any advice or suggestions, by PM or reply, as to what is the best way to pursue this I would be grateful.

    Thanks.
     
  14. dublin - 1

    dublin - 1 Registered User

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    hi david, do you mind me asking when in 2008 you took out the mortage?
     
  15. David_Dublin

    David_Dublin Frequent Poster

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    It was in July, maybe very early August. Why do you ask?