EBS What does an EBS "Variable Base Rate" mortgage mean?

Discussion in 'Tracker Redress' started by tonymac, 31 Jan 2018.

  1. tonymac

    tonymac Frequent Poster

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    My partner took out a mortgage in may 2007 with EBS through a broker called perfect mortgages. I am aware that EBS stopped issuing tracker mortgages in october 2008 and she has advised me that she was never offered anything other than a 3 year fixed rate of 5.14%. From my recollection as i took out an AIB mortgage just after the tracker era surely a tracker rate mortgage was no more an attractive option for her than what she was offered and that she was wronged by not being offered the different products available at that time, she like 99% of people wouldnt be a financial whizzkid. Two things i will ask, are one, has anyone ever heard of perfect mortgages and if so are they still operational, personally i suspect theyre not and two her contract with EBS says for years 1-3 her rate of interest will be 5.14% BASE RATE. It then goes on to state that after 3 years the interest rate will be VARIABLE BASE RATE ( currently 5%)(APR5.2%). I would love to hear from anyone who has a similar contract or anyone who can definitively tell me what the above terms relate to as most banks dont use or didnt use this terminology. I also rang the EBS helpline on her behalf and was told she should wait for the EBS review to happen as its ongoing after i had a "healthy discussion" with them, i suspect to be honest that if it was my mortgage id be chasing the broker but obviously if the broker is out of business thats a non- runner. Finally the question is has she any hope of getting put on the redress scheme based on the above information and thanks in advance for any advice.
     
  2. pguyo

    pguyo Frequent Poster

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    Tonymac,
    Similar situation to you. We took out a 3 year fixed directly with EBS. VARIABLE BASE RATE is what the offer said after the fixed period. I spoke to helpline today and they said all accounts were being investigated but only those impacted would be contacted. Variable Base Rate is a tricky one. No mention of a margin like a tracker may have stated so I reckon it doesnt look good. The letter we got after 3 year fixed said it was reverting to the current variable rate and there was no options.
     
  3. B26354

    B26354 Frequent Poster

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    In
    In May 2007 the ECB base rate was 3.75%. Your loan offer states that the interest rate after 3 years will be variable base rate that is currently 5.00%.

    I drew down my EBS mortgage in August 2007 when the ECB base rate was 4.00%. My loan offer like yours states that after 3 years I will revert to a variable base rate but to a rate that is “currently 5.25%.”

    Both accounts have the same rate definition(“variable base rate). At the time of draw down they also have the same percentage point difference (1.25%) between the ECB base rate at that time & the variable base rate referenced in the loan offer. This is in spite of both loans being drawn down months apart. Just a coincidence that margin is the same?

    I’d recommend that you contact Padraic Kissane about your case.
     
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  4. B26354

    B26354 Frequent Poster

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    Last edited: 7 Feb 2018
    I don’t have a list of EBS SVR rates from that time period but their press releases confirms their SVR on March 31st 2007 was 3.25%. Nowhere near the 5.00% quoted in Tonymac’s loan offer a month or so later & I can’t imsgine the SVR increased by 1.75% in the space of a month.So if the Variable Base Rate is not the EBS SVR what rate is it? D2325C7C-B3E2-4496-89D4-A66EBA91E53D.jpeg
     
    Last edited: 7 Feb 2018
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  5. pguyo

    pguyo Frequent Poster

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    This is what we have on the cheque issue letter
     

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  6. pguyo

    pguyo Frequent Poster

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    This was the loan offer wording.
     

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  7. B26354

    B26354 Frequent Poster

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    Pugyo-What are the dates on that loan offer & issue of cheque letter ?
    A bit strange that loan offer rate after 3 years is different to cheque issue letter.
     
  8. pguyo

    pguyo Frequent Poster

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    B26354,
    The dates I am not sure exactly as I took the images last night.
    At a guess I would say the offer letter was approx march/april 2008 and the cheque letter was possibly may 2008 as we took keys of house in late may 2008
     
  9. B26354

    B26354 Frequent Poster

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    Ok. EBS trackers were not withdrawn until October 2008. I’ve looked at friends EBS loan offers & my own offer & posters on here who started on fixed and rolled onto “variable base rate.” About 5 or 6 different offers in total. The dates of these multiple loan offers range from 2004-2008. All indicate there is a variable base of ECB rate at that time with a 1.25% difference to make up the variable base rate in loan offers.
     
  10. pguyo

    pguyo Frequent Poster

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    Are you saying that the variable base rate appears to be 4.00(ECB) plus 1.25 margin? there is no mention of a margin in the offer and no mention of SVR either. Attached is the leter after 3 year fixed is up.
     

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  11. pguyo

    pguyo Frequent Poster

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    See extact from EBS website below. I have highlighted the words Base Rate.


    Variable Rate

    The Variable Rate may be increased or reduced by EBS from time to time at its discretion.

    Advantages:

    • Ability to make lump sum payments or clear the mortgage at anytime without any additional charges.
    • The Variable Rate may cost less than a fixed rate over the fixed rate term.
    Disadvantages:

    • This rate is not directly linked to any reference rate e.g. European Central Bank (ECB) – Base Rate. This means that this rate may be increased out of line of any reference rate movements.
    • The Variable Rate may cost more than a fixed rate over the fixed rate term.
     
  12. B26354

    B26354 Frequent Poster

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    That’s the SVR they moved you onto. AIB and EBS have confirmed their SVR is not linked to the ECB base rate (see image).Lots of evidence to suggest the variable base rate is the ECB rate plus a margin not explicitly stated in the loan offer but clarified in other documentation. For a start definitions from a broker at the time confirmed the “variable base rate” is linked to a central bank rate.
     

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  13. pguyo

    pguyo Frequent Poster

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    I think we need to speak to Padraic Kissane or EBS directly again. When my wife rang a friend of hers that organised her mortgage in EBS a few months ago she was told "oh your mortgage would have been way after that" and to soften the blow " have you looked at fixing to reduce your interest rate to bring it down from 3.7 to 3.14"
     
  14. IdesofMarch

    IdesofMarch Frequent Poster

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    Last edited: 7 Feb 2018
    This is the slight of hand that EBS can be accused of, get hold of the online document "inside track" and you will have a good case! (Collateral contract issue)
     
    Last edited: 7 Feb 2018
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  15. IdesofMarch

    IdesofMarch Frequent Poster

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    The base rate, or base interest rate, is the interest rate that a central bank – like the Bank of England or Federal Reserve – will charge to lend money to commercial banks.

    While they are free to set their own interest rates for borrowing, overall the rates charged on loans and offered on savings by commercial banks tend to be derived from the base rate. This allows central banks to use base rates to encourage or discourage spending, depending on the state of the economy.

    In the years after the recession, for example, many central banks kept interest rates at record lows. This in turn led most commercial banks to charge low interest rates on loans to customers, but also offer low interest rates on money held in accounts. With the cost of borrowing low and the benefit from saving minimal, consumers should in theory be encouraged to spend money instead of saving it, giving a boost to businesses and the economy.

    Central banks release regular statements detailing their policy on base rates. See when the next release is on the economic calendar.

    So what is a variable base rate?
     
  16. haveaniceday

    haveaniceday Frequent Poster

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    ON signing for my 'variable base rate' homeloan approval offer with EBS and getting my cheque issued the following were referenced in their letters to me-


    1) the EBS standard homeloan mortgage and booklet of conditions referenced in the letter issue of loan cheque – in compliance with the consumer credit act 1995.
    AND

    the following were noted on the acceptance form

    (ii) The general conditions for EBS home loans;
    (iii) THE EBS building society mortgage conditions;
    (iv) The EBS Building Society standard form of Home Loan Mortgage; and
    (v) The rules of EBS

    Does any one have these and would they contain the definition for the variable base rate
     
  17. B26354

    B26354 Frequent Poster

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    Well it’s not a Standard Variable Rate.
     
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  18. pguyo

    pguyo Frequent Poster

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    Last edited: 11 Feb 2018
    Yes I have the second and the fourth one. I have trawled them both and no smoking gun in either. The general conditions should be attached to offer letter I think but we only have 4 or 5 but nothing only general stuff there too. Will upload the conditions in a bit.
     
    Last edited: 11 Feb 2018
  19. pguyo

    pguyo Frequent Poster

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    Images attached
     

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  20. pguyo

    pguyo Frequent Poster

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    Ebs Memorandum and Rules. I dont think anything in these. Id say they have boxes of this stuff in ebs offices all over country.
     

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