PTSB Challenging ptsb's setting of the "prevailing rate" when no rate specificied

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HelpingHand

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Hi rodger

Unfortunately, for some of these borrowers, there was no rate specified in the mortgage contract. So it didn't change.

They started on a fixed rate and were told at the time, that on expiry of their fixed rate, they would be put on the "tracker rate then prevailing".

Where the contract specified a rate and where the contract was not superseded by a change of contract, they got the rate specified in the contract.

Brendan
Brendan,

correct me if I am wrong, but would it not be the case that if PTSB stopped issuing tracker mortgage products to new customers in March 2009, then the tracker margin above the ECB at this particular point in time, would be the prevailing rate. There should be no further changes to the tracker margin from this point onwards. Therefore, if a borrower returned off a fixed rate onto a tracker product at the " tracker rate then prevailing " it means that they must return to the tracker rate offered by the bank on the date before which the bank stopped issuing trackers to new customers. In other words, how could it be possible for the tracker margin above the ECB to increase or decrease on any date after which the product was withdrawn from the market. ( ie there is no longer a prevailing rate )

pre·vail′ing·ly adv.
Synonyms: prevailing, prevalent, current
These adjectives denote what exists or is encountered generally at a particular time. Prevailing applies to what is most frequent or common at a certain time or in a certain place
 
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44brendan

Frequent Poster
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2,539
then the tracker margin above the ECB at this particular point in time, would be the prevailing rate.
That could be 1 opinion. However PTSB will have another opinion. As all prevailing rates available to borrowers in 2009 were considerably higher than those available in 2006 it would be a difficult case to make that had a tracker been made available at that time a margin of 1.1% would be the case. I really can't see any Court coming down in favor of such a claim.

However, this is the claim that is being made by Mr Ryan in the program and while I have a lot of sympathy with him I feel that his legal case is unlikely to succeed. I would tend towards Brendan B's position that he would have been entitled to a tracker on a margin commiserate with the prevailing mortgage rates at that time. Margins are not inflexible. They tend to change on a rgular basis in accordance with bank policy and risk appetite.
 

Brendan Burgess

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Hi HelpingHand

I had not heard that argument before. It's an interesting one.

Those people affected need to get in touch with Padraic Kissane and lodge the equivalent of a High Court action. Let the courts decide.



Brendan
 
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R

rodger

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According to the link posted yesterday in August 2009 it was 1.1%
 

Sarenco

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5,495
What was the rate in March 2009?
What is the particular significance of the rate in March 2009?

As I understand it, PTSB stopped offering trackers to new customers at the end of September 2009. At that time, I believe PTSB offered trackers to new customers at a margin of 2.25% over the ECB refi rate (which, as it happens, was the same margin over the ECB rate that was offered by PTSB in March 2009).

I have considerable sympathy for the opinion outlined by HelpingHand above that any borrower that was entitled to roll over to a tracker rate at the prevailing rate after September 2009, either because they broke out of a fixed term early or because that was when the fixed term was scheduled to expire, should be entitled to roll a tracker at the last margin offered to new customers. The fact that PTSB subsequently raised margins generally on their mortgage products after September 2009 is hardly a justification for picking a random margin for such trackers, which appears to be what actually happened.
 

Brendan Burgess

Founder
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The more I think about this, the more important I think it is.

It affects not just those who had their trackers restored, but it also affects all those people who did not lose their trackers. They were all put on this very high "prevailing rate" as well.

You all need to get together and pursue this in the High Court.

Or bring the issue to the attention of the Central Bank. If they find that ptsb were devious in their behaviour, then an appropriate penalty would be to tell them to accept the "Helping Hand" definition of prevailing rate.

Brendan
 

Sarenco

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5,495
Agreed Brendan but I think I may have got my dates wrong.

Surely, PTSB stopped offering trackers to new customers at the end of September 2008 (rather than September 2009), when their cost of funds started to diverge sharply from the ECB refi rate?

However, I thought I read somewhere that PTSB stopped offering trackers in September 2009 - was this when PTSB started "creatively" interpreting their mortgage contracts to prevent borrowers that broke fixed rate terms from defaulting back to trackers?

The chronology is important as I suspect the margin over the ECB rate in September 2008 was very different from the margin in September 2009.

I may be wrong but I suspect the Central Bank would have signed off on the outline of the PTSB redress scheme before it was announced and therefore should already be well aware of this issue. If that is correct, then I suspect a High Court decision will ultimately be necessary, perhaps on appeal from an FSO test case.

Is this issue unique to PTSB or did any other lenders have similar contract wording?
 
H

HelpingHand

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Hello everyone, I've been busy trawling through different lender's mortgage documentation in 2005/2006. I've been looking back through AIB's Offer of Mortgage Loan and came across this:

in Part 4 (3.2 Further Fixed Interest Rate Options/Choice) it states:

At the end of any fixed interest rate period, the Customer may choose between: (a) a further fixed interest rate period, or (b) conversion to a variable interest rate Mortgage Loan, or (c) conversion to a tracker interest rate Mortgage Loan, at the Bank's then prevailing rates appropriate to the Mortgage Loan. If the Customer does not exercise this choice, then the Mortgage Loan will automatically convert to a variable interest rate Mortgage Loan.
 

Sarenco

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5,495
That's very interesting and explains the story of Maeve Wallace (the medical scientist in Galway) on the Prime Time programme who fixed with AIB in 2006 for three years, having previously been on a tracker for one year.

The same question obviously arises in this case - should the "prevailing" rate refer to the margin offered by AIB on trackers immediately before they withdrew this product for new customers in October 2008 or should it refer to a margin that corresponds with margins generally charged by AIB on other mortgage products when the relevant fixed term expired?

It's certainly not clear cut either way but, on balance, I would have some sympathy with your view that the former is the better interpretation of the wording.

It will be interesting to see how this plays out.
 

Brendan Burgess

Founder
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It will be interesting to see if this issue makes it as far as the High Court (possibly by way of appeal from the FSO) or whether the Central Bank decides to intervene again.
Just to clarify the process here

1) Someone should take it to the Ombudsman. But if they lose, there is no point in going to the High Court. All they can do is return it to the Ombudsman
2) Someone else should take it directly to the High Court and avoid the Ombudsman completely. If they win their case in the High Court, then it will be a precedent unless ptsb succeeds in an appeal to the Court of Appeal.
3) And of course, the Central Bank should be encouraged to tell ptsb to put all these borrowers back on the prevailing rate per HelpingHand's definition.
 

movado

Registered User
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Hi there,
Ive been following these threads and not sure which thread to post in my questions, so apologies in advance if its the wrong one! im also completely clueless when it comes to this kind of stuff, so please bear with me:)

'Helping Hand' I have similar-ish (not the same) wording in my "letter of approval - particulars of mortgage loan" document from PTSB:

"GENERAL MORTGAGE LOAN APPROVAL CONDITIONS 'CONDITIONS RELATING TO FIXED RATE LOANS' APPLIES IN THIS CASE. THE INTEREST RATE SPECIFIED ABOVE MAY VARY BEFORE THE DATE OF ISSUE OF THE LOAN. ON EXPIRY OF THE FIXED RATE PERIOD AND WHERE THE APPLICANT CHOOSES THE OPTION OF A TRACKER MORTGAGE INTEREST RATE, THE INTEREST RATE APPLICABLE TO THE LOAN WILL BE THE TRACKER MORTGAGE RATE APPROPRIATE TO THE BALANCE OUTSTANDING ON THE LOAN AT THE DATE OF EXPIRY OF THE FIXED RATE PERIOD. IN THE ABSENCE OF INSTRUCTIONS FROM THE APPLICANT AT THE EXPIRY OF THE FIXDE RATE PERIOD, THE INTEREST RATE FOR THE LOAN WILL BE THE TRACKER MORTGAGE RATE APPLICABLE TO THE BALANCE OUTSTANDING ON THE LOAN, AT THE DATE OF EXPIRY OF THE FIXED RATE PERIOD AND AS MAY BE VARIED IN ACORDANCE WITH VARIATIONS TO THE EUROPEAN CENTRAL BANK REFINANCING RATE."

Just a bit of history, I drew down my mortgage and started paying it from the 18th July 2007, according to the approval letter the interest rate was a 1 yr fixed rate of 4.39%. However on recently checking my mortgage statements for that period (just received them from ptsb after requesting them a few times), they seemed to have possibly changed the interest rate in less then a year although it was fixed. There are several rate changes (detailed below) from then until I had to sell the house and closed out the mortgage on 18 December 2009. I cannot tell what the margin from the ecb rate is, as its not consistent with the changing rates and its not in any of my documention, (I do have the (i) approval letter, (ii)overpayment calculation, (iii)Statements and (iv) interest certs) Might there be any other important documents I should be requesting, besides the offer letter which I need to try and get from my solicitor?

Below are the Interest rate changes as per the mortgage statement:
01 FEB 08 - New Product 5.55%
04 FEB 08 - Rate change 4.75%
01 NOV08 - New Product 6.35%
01 NOV08 - Rate Change 4.75%

01 FEB 09 - New Product 4.55%
13 FEB 09 - Rate change 4.05%
03 APR 09 - Rate Change 3.55%
30 APR 09 - Rate Change 3.3%
05 JUN 09 - Rate Change 3.05%
27 JUL 09 - Rate Change 3.55%
05 JUN 09 - Rate Change 3.05%
05 JUN 09 - Rate Change 3.05%
01 NOV08 - Rate Change 4.75%

I requested my overpayment calculation from PTSB and they seem to have only taken into account the figures from June 2009 - Dec 2009. And are offering a NET REFUND: E526.25 + COMPENSATION E1400 = TOTAL 1926.25

Would anyone know why they have only accounted for June 09 - Dec 09, and should they have gone back further to 2007 and 2008? or might the 6 year statute of limitations have any bearing here? (im completely clueless when it comes to this stuff, so there might be a good reason why they only calculated these 6 months)

Many Thanks..
 
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