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

[B26354]

https://www.pressreader.com/ireland/the-irish-times/20051007/282484294154084

another press piece where EBS highlight their policy of giving the customer the best deal i.e tracker mortgage rates
again quotes from dara deering this time in the Irish times oct 2005

This is all very fishy. McGovern & Deering at that time saying trackers are available and best rates for customers. Alan Merriman’s Financial Review in the 2007 & 2008 EBS annual report states that over a quarter of EBS’ loan book is made up of tracker mortgages (see images attached).

Yet in 2015 Merriman tells the banking enquiry that EBS “offered very little” by way of trackers mortgages(see image attached). It’s also a remarkable increase of 11% in SVR’s in the space of a year when trackers weren’t formally removed until October that year. And an equally remarkable decrease of 14% in fixed rate loans over a year. So a significant decrease in fixed rate loans but an increase in SVR’s during 2008.

 

[haveaniceday]

Question - may have been asked and answered before - but when did EBS stop using the term Variable base rates in their loan offers?

when did the use of the term SVR start?

what was being used around July 2008 onwards

did they rename them after they stopped offering trackers in october 2008

 

[RAzvan R]

Question - may have been asked and answered before - but when did EBS stop using the term Variable base rates in their loan offers?

when did the use of the term SVR start?

what was being used around July 2008 onwards

did they rename them after they stopped offering trackers in october 2008

Hi Haveaniceday,
The only time I see the mention of SVR was only in the Tracker form & condition, advertise as per @B26354 in their reply to my complain and last week when I received the statetment they send a book from AIB with SVR policy statetment.
I did not see any contracts between 2004 to 2008 with the mention of SVR in the loan offer.
It will be very intersting actualy to see one contract with SVR in the loan offer.
Maybe we should OPEN another thread and to ask particulary for a SVR loan offer as an example.
More likely will be from Nov 2008 onwards.
Regards,
RR.

 

[B26354]

https://www.pressreader.com/ireland/the-irish-times/20051007/282484294154084

another press piece where EBS highlight their policy of giving the customer the best deal i.e tracker mortgage rates
again quotes from dara deering this time in the Irish times oct 2005

I’ve attached minutes of an EBS board meeting from 2005. They expect ECB rates to increase and significantly they see their loan book comprising of 60% trackers by 2008. Echoes what Deering & Mcgovern were saying during those years; trackers were the only game in town. Yet figures from 2007 & 2008 annual reports indicate that trackers accounted for 25% approx of their loan book. Alan Merriman & risk manager Fidelma Clarke have retrospectively suggested that EBS didn’t do a lot of tracker business during that period(Clarke estimates 20%).

So we’re getting somewhat mixed messages...unless trackers were hidden somewhere else in their loan book...perhaps tracker was the rate a customer would roll onto after a fixed rate??Now that might have brought tracker business up to 60% in EBS by 2008.

 

[B26354]

I'd an EBS mortgage and asked about switch from an SVR to a tracker probably back when the tracker and SVR were the same. I assume late 2006 early 2007. I was told there was no point, because the tracker and SVR were now equivalent products. The mortgage was small at that point so I didn't care too much.

That was when they were still heavily advertising trackers, so I doubt it was a deliberate or underhand policy to stop someone from getting a tracker.
It seemed EBS thought SVRs were obsolete and all future mortgages would be trackers.

I'd like to see EBS's newspaper advertising from that time. There is a possibility they may have advertised, at the point when their SVR and tracker rates were equal, that their SVR was a tracker.

...or maybe their “SVR”’s/variable rates are where the trackers were hidden as they were deemed “equivalent products” by EBS as mentioned by Ashambles earlier in thread?

 

[B26354]

Nationwide Building Society in UK explanation of

Standard and Base Mortgage Rates
When you reach the end of a fixed or tracker deal, you will automatically move onto either our Base Mortgage Rate (BMR) or Standard Mortgage Rate (SMR), depending on when you reserved your original fixed or tracker deal.

If you reserved your fixed or tracker product through Nationwide on or before 29 April 2009, through Derbyshire on or before 30 May 2009 or through Cheshire on or before the 14 June 2009, you’ll move on to the Nationwide BMR. If you reserved your product after those dates, you’ll automatically move on to the Nationwide SMR.

Both are variable rates which we may vary in accordance with our mortgage terms and conditions. The BMR is guaranteed to be no more than 2% above the Bank of England Base Rate, whilst the SMR has no upper limit or cap.

If you choose to switch from our BMR to a new product, it isn’t possible to switch back to our BMR at a later date.

Further details of our BMR and SMR can be found in the table below:

Note at the end of those minutes that it states that EBS have a similar pricing policy as the Nationwide Building Society in the UK referenced by Ides of March earlier in thread. They also have a “Base mortgage rate” product.

 

[IdesofMarch]

Well done, this should add weight to your argument regarding variable base rate when presented to the CBI.

 

[haveaniceday]

so my EBS buy to let - variable rate ( which is a tracker)
On letters from ebs that I have starting November 20th 2008
they said
'EBS will be passing on the full increase/decrease on its variable loan rate'

Then on 20th april 2011 they simply used the term your loan i.e the interest rate on your loan will increase by .25%


on My EBS homeloan ( apparently not a tracker)

The wording on the 2Oth of november was EXACTLY the same
'EBS will be passing on the full increase/decrease on its variable loan rate'

they used this term until at least may 2009 the next letter i have after this is july 22 2010 and they just user the term 'loan'

I can't find the term SVR anywhere?
also my homeloan loan offer has no definition for what a variable base is

So I am wondering what is the legal based for treating these loans differently - both were described as a variable loan?

 

[Bikini Widow]

I see AIB set aside another 40 million for tracker scandal and looking to close off the program. Important we all contact finance committee members are any other pressure points.

AIB sets aside extra €40m to cover tracker mortgage scandal
via The Irish Times
https://www.irishtimes.com/business...m-to-cover-tracker-mortgage-scandal-1.3411294



Best wishes,
BW

 

[haveaniceday]

list of all committee members here - click into any and scroll down - email address down near the bottom of the page
I think contacting these people is a very good idea BW
http://www.oireachtas.ie/parliament/oireachtasbusiness/committees_list/fpert-committee/members/

 

[B26354]

So I am wondering what is the legal based for treating these loans differently - both were described as a variable loan?

The theory supported by quite a bit of evidence is that they didn’t have a traditional SVR between 2004-2008.

At a systems level all new loans during that period appear to be trackers i.e. variable base (ECB)+ margin.

At a contractual/loan offer level one could argue there is ambiguity and an omission of details surrounding the interest rate basis on fixed term loans. Customers who started on a tracker have clarity, however additional correspondence from EBS to the customer via broker confirms the variable base rate term contained in fixed loans is ECB base rate + margin.

It is my opinion that it is a myth that EBS had 30-40% less trackers on their loan book compared to other banks at that time when competition was so intense. The 2011 financial crisis review headed by Prof Nyberg highlighted how poorly resourced EBS’ risk management was (see image). Merriman has claimed though that they weren’t selling trackers because they thought they were madness. So EBS were the only clever & prudent bank that didn’t sell lots of trackers compared to the other reckless banks? I’m not buying it.

At the same time you would also think that the 2011 review would have found some evidence of what we are claiming on this thread? Other EBS officials who have been interviewed at the oireachtas finance commission in recent years such as Fidelma Clarke have used the 2011 review to say they only had 20% trackers on their books(see image). However it turns out that commission primarily investigated the commercial aspect of EBS’ loan book not residential(see image).

Maybe it’s becoming clearer why EBS are being hidden behind AIB and away from further investigation.

As BW has said above-get in touch with finance committee members ASAP.

 

[haveaniceday]

also the idea that EBS only had 20% tracker on their books seems pretty strange as their tracker rates were SO competitive?
I know they they had the best TRACKER rate on the market in dec 2007/Jan 2008
- this ebs tracker rate was also better than the ebs variable rate - so who would willingly select the variable rate - makes no sense?
and I wonder how long this was the case

I also wonder where the EBS commission rates to brokers also better than what other banks /mortgage providers were offering- Reading the EBS Annual reports in from 2005 - 2007 the EBS strategy was very much to grow their business through the use of brokers?
not to mentions at the time it would have been hard for a broker to justify to a customer to go with a banks that offered higher rates than EBS?

 

[haveaniceday]

also the idea that EBS only had 20% tracker on their books seems pretty strange as their tracker rates were SO competitive?
I know they they had the best TRACKER rate on the market in dec 2007/Jan 2008
- this ebs tracker rate was also better than the ebs variable rate - so who would willingly select the variable rate - makes no sense?
and I wonder how long this was the case

I also wonder where the EBS commission rates to brokers also better than what other banks /mortgage providers were offering- Reading the EBS Annual reports in from 2005 - 2007 the EBS strategy was very much to grow their business through the use of brokers?
not to mentions at the time it would have been hard for a broker to justify to a customer to go with a banks that offered higher rates than EBS?

 

[B26354]

- this ebs tracker rate was also better than the ebs variable rate - so who would willingly select the variable rate - makes no sense?
and I wonder how long this was the case

What EBS Variable Rate is this you speak of? The only variable rate I can see is the same as the advertised tracker until mid 2008 and then the so called variable rate deviated from the tracker.

Unless you are suggesting you were offered a more expensive “variable rate” than your “variable base rate” at the beginning of 2008? Now that would be interesting.

 

[B26354]

I also wonder where the EBS commission rates to brokers also better than what other banks /mortgage providers were offering- Reading the EBS Annual reports in from 2005 - 2007 the EBS strategy was very much to grow their business through the use of brokers?
not to mentions at the time it would have been hard for a broker to justify to a customer to go with a banks that offered higher rates than EBS?

In my case my broker got his commission as EBS wanted people like me to fix for a few years. There was a verbal promise from my broker that I would roll onto tracker after that fixed period...but he said trackers were not available to start off on but not to worry as I would roll onto the tracker after 3 years.

 

[haveaniceday]

see image the variable was 5.25 in the top table - then in the bottom table my broker requested for the 1.05 tracker rate for my loan - when I asked him to sort out a tracker mortgage for me.
My broker initially had me all set up for a fixed rate mortgage

 

[B26354]

see image the variable was 5.25 in the top table - then in the bottom table my broker requested for the 1.05 tracker rate for my loan - when I asked him to sort out a tracker mortgage for me.
My broker initially had me all set up for a fixed rate mortgage

Ah I see. You had a LTV less than 95% so the tracker application was for 1.05% above base. I think you remained on the variable/variable base/tracker because the margin of 1.25% above base seems to apply to every fixed term offer. As you have said your broker assumed that the variable base rate was a tracker too because that was the offer you received after you requested it.

However that doesn’t explain why you didn’t get a tracker of +1.05 when they were still available. It didn’t help brokers or customers that the interest rate basis was not included in the loan offers!! Fact is he assumed variable base rate was a tracker but didn’t calculate the ECB + margin of 1.05 himself.

 

[tonymac]

Good posting B26354, seems like a lot of assuming went on here and unfortunately its been at the expense of quite a high number of people. This is far from good enough especially from brokers who correct me if im wrong were part of an EBS panel. Consequently a lot of people have potentially been done out of a lot of money because it will be very hard to prove that these were indeed tracking the ECB rate. From reading the postings an awful lot of ambiguity has been going on here and EBS appear as if theyre hiding behind AIB in all this, time for them to have some time in the spotlight to explain once and for all this ambiguity etc and especially for me the lack of an interest rate basis on the mortgage contracts around the years in question, 2004-2008 especially as well as the fact that despite the availability of tracker mortgages at this time the lack of them offered. The arguement here is why have them at all. It also appears that these mortgages appear to have just slipped into being SVRs despite the absence of this type of mortgage at that time and the non appearance of the title SVR on the contract letters. These folks are the reasons why it is imperative that anyone with an interest in this contacts the TDs on the finance committee so as they can grill the people that need grilling in the first instance, i for one have contacted the one that for me has been the best of them all in fighting for various mortgage holder groupings, eg people with the highest mortgage rates in europe, Michael McGrath but there are plenty more on this committee, haveaniceday has a posting with the names on it

 

[RAzvan R]

I agree that "10 years ago the prevailing rate was a tracker rate", but today the prevailing rate would be classified as a LTV variable rate. 5 years ago (2013) the prevailing rate would be SVR, as there was little alternatives available.


After that its down to interpretation of the english language, where the comma's in the sentences are and the detail of the grammar used. This is the tricky part and one that people will disagree on.

"at the end of the fixed rate period, the prevailing variable rate will apply"
I think most can agree that prevailing means current.
How important is that comma in the sentence?
How important is the sequencing of the text - is it different to "the prevailing variable rate will apply at the end of the fixed rate period"

I will let an English teacher/professor clarify that, as I don't want to expose any potential limitations in my grammar

Speaking of language, I wonder has anyone ever asked KBC for a mortgage contract in Irish?? Just curious now

If the prevailing variable rate 10 years ago was the tracker surely that’s what we were ment to go onto.
If not it would have to say at the end of the fixed rate period the lenders then prevailing variable rate will apply.
Kbc simply say that the lenders prevailing variable rate is svr no matter if 10 years ago or now, and nothing to back this up yet the central bank have let them away with it. I think they should be made prove it either way.

Politics & Central Bank ?
Is only one person (& his team) in Ireland that can Challenged all.

 

[B26354]

I’ve attached Padraic Kissane’s comments on the “variable base” rate issue at the Oireachtas committee yesterday.