AIB AIB restoring my tracker - but at 3.67%!

bungaro

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150
got a letter from aib in the post today too with something unexpected, got offered a tracker mortgage!! not all good news though, its for 3.67% and whatever the ecb rate is (0.0%) so just going to stick with my variable rate
 

Brendan Burgess

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Summary of thread

bungaro's letter of offer says

"3.2 At the end of any (my emphasis) fixed interest rate period, the customer may choose between:

a) a further fixed rate
b) conversion to a variable rate
c) conversion to a tracker a the bank's then prevailing rate

In the context of Clause 3.2 , the term "prevailing rate" means the interest rates then current and available at the date that the fixed rate period expires"

bungaro fixed in 2008 - not sure for how long. When the fixed rate ended, she should have been offered a tracker but wasn't.

Now AIB is saying that when the fixed rate ended, the tracker rate was ECB +3.67%
 
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bungaro

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hi brendan
took out the mortgage in late 2008 and was never offered a tracker back then for some reason so we've flitted between variable and fixed since then. we are in negative equity and have been approved for a new mortgage as we're looking to move so it was a bit of a shock to read the letter when it arrived in the post today.
like you said the rate is terrible so there is no way i'm considering it
 

Brendan Burgess

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But the main thing is that even at 3.4%, it's at least 1% higher than it should be.

If you were offered a tracker at ECB +2.4%, then I think you would have a more difficult decision.

Brendan
 

Balfour

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Hi Bungaro,

I got a tracker mortgage offered to me on Friday with the exact same rate of 3.67%, they even offered me 800.00 in compensation for the delay in coming back to me.

I was wondering did you get any further in relation to your query, even a reduction in the rate.

Should I wait until the CB review is over and finalised until I accept the 800.00
 

Pinesky

Registered User
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The interest rate risk the bank carries on trackers is higher than on pure variable rate mortgages . The bank can increase rates on pure variable rates any time they want but can only increase tracker rates when the ECB rate rises . Thus their margins would diminish if market rates rose and the ECB didn't . The issue here is really the variable rate at 3.4 % it should be around 2.3 % with trackers around 2.5% over ECB .
 

Sarenco

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Thanks Balfour.

So, the condition provides that in the absence of any election on your part you default to a variable rate at the end of the fixed rate period. The condition doesn't actually say that AIB must notify you of your options at or prior to the expiry of your fixed rate period but AIB seem to be accepting that as implicit in the way the condition is drafted – which is certainly good news from your perspective.

Where it gets interesting is the definition as to what constitute AIB's "prevailing rates" for the purposes of this condition – "…prevailing rates means the interest rates then current and available at the date that a customer's fixed rate period expires".

If you fixed in 2008, I assume that trackers were no longer generally offered to new customers by AIB by the time your fixed rate period expired. So what was the tracker interest rate "then current and available" at the time your fixed rate period expired?

I would argue that in this context it must mean either: (i) the average margin over the ECB refi rate charged on the existing AIB tracker book at the time that your fixed rate period expired; or (ii) the average margin over the ECB refi rate that was widely marketed or offered to new customers immediately prior to the withdrawal of this product by AIB.

I can't see any contractual basis for AIB simply pulling a tracker margin from thin air on the basis of their own assessment of the market today or determining a tracker margin by reference to their current SVR.

If I was in your position I would reject this offer and, if necessary, appeal to the FSO (copying your complaint to the Central Bank).

Hope that helps.
 

kim

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133
Hi
I got the exact same letter offering me the tracker at the prevailing rate of 3.67%, my fixed rate expires next wk, I'm waiting on a call from my financial advisor to enlighten me as to what this letter is about, to say I'm confused is an understatement. Is this aib offering a tracker that I should have got all along?
 

Balfour

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That's very interesting, why are they now offering tracker rates when they never offered them before.
 

bungaro

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no idea why i was offered the tracker sarenco. we have applied for another mortgage as we want to sell our current place but i don't know if that had anything to do with us being offered. like everyone else on here who has been offered the tracker, i will be staying on the lower variable rate obviously
 

kim

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I think the penny might be dropping I read this thread so many times now and that thing about clause 3.2, so I sat down and looked at my contract and I have that same clause,so am
I right in saying that when i fixed for 5 yr in 2008 that when the fixed period was up in 2013 that I should have been offered a tracker rate again? But I wasn't so hence the letter....
 

Brendan Burgess

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Balfour, bungaro and kim

I have summarised this thread in the second post.

Could you each provide the following information:

1) What date did you fix?
2) What date did the fixed rate end?
3) Did they offer you a tracker then?

If you fixed a few times, please give the information for the earliest time you fixed.

Brendan
 

kim

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133
Hi Brendan
I fixed in late June 2008 for 5 yrs so that ended in July 2013, I am 99.9% sure wasn't offered a tracker then hence getting that letter but of course I have every document relating to my mortgage except that letter offering me the rates for 2013.... I need to have a proper look around for it....
 

kim

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Just wondering what do we do now? I haven't replied to the letter, so I'm automatically on variable rate now of 3.4%.... Do we wait to hear more?
 

bungaro

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Balfour, bungaro and kim

I have summarised this thread in the second post.

Could you each provide the following information:

1) What date did you fix?
2) What date did the fixed rate end?
3) Did they offer you a tracker then?

If you fixed a few times, please give the information for the earliest time you fixed.

Brendan
hi brendan
just got out the mortgage documents there to give you the exact details.
we took out the mortgage in september 2008 and it was a variable rate we were put on. i think it was june of 2010 that we fixed for two years and at the end of it we got the standard letter of rates but no mention of a tracker on it (i have the letter here).
there is a section in the mortgage (part 4, 3.2) about further fixed interest rate options (i've attached below) and i think that i should have been offered one but never was.
can anyone advise what they would do if there were in my shoes?? brendan if you would like to see the docs i have then just pm
thanks
 

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Balfour

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Brendan & Co

If no one has any objections
I am going to attach the actual letter I received back from the bank (obviously my personal information will be deleted).

That way, you get the full picture!
 

kim

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133
Thanks Brendan, I rang aib asking why I wasn't offered a tracker when my fixed rate ended in 2013 and was told that it wasn't a product at the time?? It's only being offered to me now in 2016?? I know now that I wasn't offered it in 2013.
 

Balfour

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149
All

Further to being offered a tracker rate of 3.67%, please find attached the latest letter from the bank

I would appreciate your comments on what I do next

Thanks in advance
 

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