DARKMATTERS
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My AIB loan facility at clause 3.6.1 states;
“ The Tracker rate is made up of two parts
(A) the European Central Bank’s main refinancing operations minimum bid rate; (”ECB”) which is variable and
(B) the Tracker Margin as stated in Part 1 of the Particulars of Offer of Mortgage Loan, subject to 3.6.3 below.”
At clause 5.3 entitled “Notice of. Variation” it states;
“Save for any period of a fixed interest rate loan, the Bank shall give notice to the Customer of any variation in the interest rate applicable to the Mortgage Loan, either by specific notice in writing served on the Customer in accordance with the Lender’s Mortgage, or generally by newspaper advertisement published in a least one National Daily Newspaper. Such notice or advertisement shall state the varied interest rate and the date from which the varied interest rate shall apply.”
I have recently discovered that the ECB discontinued the ECB mro minimum bid rate in October 2008 and AIB did not inform me of same. Is this a breach of contract or is it unreasonable behavior by AIB?
We introduced a bank guarantee scheme the month before. If a €440 billion bank emergency measure wasn't enough it's hard to see this change being the straw to break the camels back?
Can you provide the names of these cases, please?It must be a serious enough issue as three separate High Court Judges have remitted the matter to plenary hearing and another summary judgment matter was also remitted to plenary based solely on this point.
Maybe.Most customers would not have a clue about what the Banks Guarantee was all about.
the Bank that has an obligation to act honestly, fairly and reasonably in conducting its business activities. It is obliged to act with due skill, care, dillegence and must act recklessly or negligently or mislead its customers.
I now know that this rate/ rate procedure ceased to be available to the market from the 15 October 2008. However, the Bank’s own reaction was to immediately withdraw its Tracker Mortgage products as they knew the impact that the change in ECB monetary policy would have.
Most customers would not have a clue about what the Banks Guarantee was all about.
Thanks.Jaycom,
Can you provide the names of these cases, please?
This particular case has been posted on the internet for all to see, so I will give you this case number [2020] IEHC 484.
The significant change in ECB monetary policy that was announced on the 8th October 2008 when the ECB announced a change from the ECB minimum bid rate to the fixed tenders full allotment rate signaled to the Eurozone Banks and others that the ECB was going to prop up the inter bank money market and become the lender of first choice as oppose to being the lender of last resort. From October 2008 to May 2009 the ECB rate dropped significantly to keep the Banks afloat. The ECB also allowed the Eurozone banks to use significantly poorer collateral in which to exchange for funds. All tender were accepted no matter what the level was. The Eurozone Banks knew they had extensive toxic loans on their individual loan books so they would not lend to one another. This is why the ECB had to intervene. The Banks also knew that because lending into the wider economy was going to be substantially reduced that a recession was imminent. In a recession property prices fall.The change in how the ECB conducted monetary policy and the decision to withdraw tracker products are separate.
For the purpose of tracker mortgages it was only a name change. ECB policy would have been the same I.e., a rate cut regardless of what they called it. The allocation process didn't matter. They offered you the same product. Ok they didn't tell you the name had changed but that's all.
The reason banks withdrew trackers was simple their costs and ECB rates diverged significantly.
Surely the same logic holds for the ECBs decision to change its allocation process. Why would a procedural change by a central bank conducting monetary policy raise more of an alarm bell than a state guaranteeing every last cent of Irish banks?
By the time the EU-IMF bailout happened two years later the horse had already bolted so as to speak, the value of Irish Property had halved and was in the doldrums.Maybe.
But the bank guarantee and EU-IMF bailout two years later was impossible to avoid if you consumed literally any Irish media at the time.
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