KBC KBC: Tracker vs Variable Rate

odonovanpm

Registered User
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In that case why did banks continue to offer trackers, at increasingly competitive margins, right up until Q4 2008? If banks wanted to remove any possible cap on their margins in 2006 wouldn't you have expected them to stop offering trackers in 2006?

Nobody could possibly have anticipated in 2006 that the spread between standard variable rates and tracker rates would develop in the way that it did after the financial crisis. Banks certainly didn't - otherwise they would have stopped offering trackers much, much earlier.

The notion that any bank official consciously decided at any time in 2006 that they would consciously lure borrowers off trackers seems wholly fanciful to me. It simply flies in the face of logic.

I appreciate that you feel aggrieved that you signed a contract back in 2006 that turned out to be a poor financial decision with the benefit of hindsight. However it doesn't necessarily follow that there was any deception, misrepresentation or bad faith on the part of your counterpart. You just made, what turned out to be, a bad decision.

Such is life.
Sarenco, you are talking out both sides of your mouth. Lucky for me I can well afford to cope with 'what turned out to be a bad decision' - however, your attitude (in my opinion) is naive. As everyone is very much aware at this stage, banks in Ireland operate to the highest standards and always put the customer first.
 

Sarenco

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5,666
Sarenco, you are talking out both sides of your mouth.
In what way am I talking out of both sides of my mouth? Can you explain why you think my attitude is naive?

I have no dog in this fight but I am genuinely curious why you feel you have a case. That's all.
 
R

rodger

Guest
Sarenco

You always lean towards the argument the bank will attempt.

The original offer stipulated 1.25% above ecb for the life of the loan.
Plus an option to fix.

Why is the bank not sticking to the terms?

We'll find out what central bank is going to do about it.
 

Sarenco

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5,666
Sarenco

You always lean towards the argument the bank
I'm acutely conscious that it appears that way Rodger.

For the record, I believe that banks, like any other private company, should be primarily concerned about delivering value to their shareholders. That may be an unfashionable viewpoint but it happens to be the basis for our entire economic system.

However, that certainly does not give banks, or anybody else for that matter, the right to welsh on their contactual obligations. If you do a deal, you should stick to the terms of that deal.

If a bank agreed to advance a variable rate loan at a rate of 1.25% over the ECB refi rate for the term of the loan then they should absolutely be required to honour that commitment. No question.

However, if the borrower and lender subsequently agreed to vary to terms of the original deal, then it is the terms of that subsequent deal that matters. In the absence of any misrepresentation, deception or bad faith on the part of the lender or borrower, the parties should be entitled to agree whatever they see fit and should be entitled to expect their bargain to be upheld in a court of law. That's the cornerstone of any liberal democracy.

If you accept that basic premise, the question is then whether the subsequent agreement between the parties remains valid or whether there is any valid reason to set it aside.
 
R

rodger

Guest
We are all trying to be patient with you

There is no subsequent agreement

Take a minute to absorb what's being said

There was an original agreement

There was a fixed period

At the end of the fixed period the bank pulled a fast one by using there original terms and conditions which so happened to omit the word tracker to push it onto SVR

The bank used the word variable rate to imply standard variable rate
 

Sarenco

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5,666
Surely there was a subsequent agreement when the borrower fixed?

Otherwise how did the fixed rate loan agreement come into being? Magic?

There was an original agreement. The parties subsequently agreed to replace that agreement with something else. No?

Incidentally, your patience is much appreciated.;)
 
R

rodger

Guest
In the original agreement an option was provided to fix

In my case for a charge of €63

A simple letter to Aib taking the fix was sufficient.

I think a list of fixed options was first provided at the time.

Once the fixed period elapsed the original terms reverted
 

Sarenco

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5,666
Once the fixed period elapsed the original terms reverted
But that's not actually the case, is it? The terms of the amended contract did not provide that the parties would revert to the original terms of the loan at the end of the fixed rate period.

You might wish that was the case but that doesn't make it true.
 
R

rodger

Guest
It is true in my case

There were terms agreed initially

I can dig it out of you want

I have posted it here before

Clauses x y z described what happened initially, what happened in case of a fix, options after a fix.
After a fix was option of fixing again.
Option of returning to variable.

Guess what variables means in that context?

Tracker variable. correct.

Why?

Because that's the only variable described anywhere in the terms and conditions.

That's actually the case. I'm not making it up.

I can't understand why you're continuing to disbelieve.
 

Sarenco

Frequent Poster
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5,666
Incidentally, a loan contract can be amended by way of an exchange of correspondence or even by verbal agreement - there is no particular formality required.
 
R

rodger

Guest
By the way I am referring to the Aib conditions.

There were two sets of conditions

Originally 2005 options were to 1 opt fix again 2 opt variable (tracker)

And later in 2006 contacts were written1 opt fix 2 opt to tracker variable 3 opt variable

Both contacts are entitled to return to tracker.

I guess they are the 3000 cases Aib are planning to restore.

in 6 months time when I'm restored to tracker what will your argument be?
 

Sarenco

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It is true in my case
It's not though is it?

The term of your fix did not say that you would revert to the rate originally agreed at the end of the fixed rate term.

It said that you would revert to a variable rate.

I know you want to believe that "variable rate" should be read to mean "variable rate determined at the margin over the reference rate as set out in the original agreement". Your difficulty is that is not what your agreement says.

I don't believe for a second that any court would agree with your interpretation that a variable rate means a tracker in this context. However, if you are convinced otherwise then you should issue proceedings against the bank.
 

Sarenco

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5,666
By the way I am referring to the Aib conditions.

There were two sets of conditions

Originally 2005 options were to 1 opt fix again 2 opt variable (tracker)

And later in 2006 contacts were written1 opt fix 2 opt to tracker variable 3 opt variable

Both contacts are entitled to return to tracker.

I guess they are the 3000 cases Aib are planning to restore.

in 6 months time when I'm restored to tracker what will your argument be?
Sorry I am not familiar with these terms.

Are you now saying that you had an explicit right to revert to a tracker? What's the problem so?
 
R

rodger

Guest
Twice now you have said what I'm saying is not true.

I'm not lying to you.

First there is the central bank review.

After that we can consider high court

After that European court

Why do you think Aib have said 3000 customers are being reviewed?

Why has Aib provisioned €190m
 
R

rodger

Guest
The problem is that in my case Aib reneged on the terms.

That is only a temporary set back

The central bank has recognised the conduct by Aib and other banks and are reviewing.

Aib has made media announcements saying they are looking to restore customers to tracker and it will cost them €190.

Eventually I will be restored to tracker.

That is just Aib

There are another 5 banks who did the same thing
 

Sarenco

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5,666
Rodger

I never accused you of lying.

Did the terms of your fix say you would default back to an unspecified variable rate or a variable rate at a margin over a specified reference rate?
 
R

rodger

Guest
Let me repeat the conditions were agreed up front agreeing what would happen in the case of a fix and at the end of a fix.

The options at the end of a fix were
1 fix again
2 opt variable (tracker)

The conditions described only one type of variable rate. It's a tracker variable rate of ecb+1.1%
 

Sarenco

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Sorry Rodger but can you please be clear - did the option actually say "variable rate (tracker)" or is that your interpretation?

If it did say "variable rate (tracker)" then why haven't you sued the bank for breach of contract?
 
R

rodger

Guest
How do I go about suing?

My financial adviser was putting together a case for the high court with barristers.
Is that the kind of thing? It's not inexpensive.

David Hall and Ross Maguire were planning similar back on 2015 against aib

Then the central bank announced a review

I can see your argument is .. If I'm right then why have I not won?
 

Sarenco

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5,666
Sorry Rodger but can you answer the first question - did the terms of your fix provide that you would default back to an unspecified variable rate at the end of the fixed period or did it expressly provide that you would default back to a tracker rate?

You previously told us it was the former but you now appear to be implying it's the later. What exactly did the letter say?
 
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