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

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

  1. IdesofMarch

    IdesofMarch Frequent Poster

    Posts:
    312
    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:
     
    B26354 likes this.
  2. B26354

    B26354 Frequent Poster

    Posts:
    171
    For those who doubt that the “variable base rate” is referencing a central bank rate i.e. ECB base rate, I’ve attached a definition that appeared on mortgageireland.ie website circa 2006/2007. Mortgageireland.ie were brokers and mortgage advisers and were regulated by the Irish Central Bank. I’m not sure if they are around anymore as their website is down. This is the only defintion of Variable base rate I’ve ever come across. Worth noting again that EBS & AIB have confirmed that their SVR is not linked to or dependent on the ECB base rate anymore.
     

    Attached Files:

    RAzvan R and gnf_ireland like this.
  3. gnf_ireland

    gnf_ireland Frequent Poster

    Posts:
    1,180
    You are focusing too much on the term SVR. SVR does not appear in my mortgage agreement either - it talks about variable rates, tracker rates and fixed rates. Neither does LTV rates or any sub category of variable rates.

    The only difference between a tracker rate and a non-tracker variable rate is a tracker rate is a set percentage offset against something - normally ECB Repo Rate. SVR, LTV, MVR and any other variable rates the banks come up with are simply variable rates and move at the banks discretion.

    If you keep beating this drum over and over again, you will lose. You need to show why "Variable Base Rate" is a tracker rate, not why it is not an SVR.
    I can prove an apple is not a orange, but does not make it a banana.

    The article clearly states anyone who has been offered a tracker would be honoured. That's straight forward enough. The challenge you all have is PROVING LEGALLY that "variable base rates" are trackers. If you can do this, you have won your case; if you fail to do this you have lost.
    Proving that "variable base rate" is not SVR is only part of any discussion.

    A tracker rate is a variable rate, but not all variable rates are trackers

    With all due respect it is not about what you understood or what you thought - its about what you can prove. This is the difference in the discussion. You also contradict yourself when you say "I would have had no idea WHATSOEVER that the mortgage doc should have said tracker ecb + XX% - not a clue in the world"
    I accept you were probably young etc, you its hard to be convinced on one side you KNEW you where getting a tracker with absolute certainty and on the other you say you had no idea the tracker should have a % offset from ECB. Like most I imagine you were focused on buying a house at the time and how much money you could borrow, not the finer details of the mortgage agreement. This is not a criticism, but the reality of at least 70% of people who buy homes !


    ******************** Separate Note *************************
    This thread is very good in that it has shared a lot of documents and there is a very positive one from the mortgage brokers site that will no doubt support an argument.
    However, there is way too much opinion on it and what people thought, both at the time and now. It is irrelevant. It is about what can be proven. There is way too much focus on a variable base rate not being an SVR, rather than on why a variable base rate is a tracker.
    I think a few of you need to come together - get all your material consolidated and ensure that you engage with the next steps rather quickly. As I said on another thread its likely you will get one shot at this before the tracker scandal loses momentum, so you have to make it count.
    Good luck to you all .....
     
    RAzvan R and RedOnion like this.
  4. RedOnion

    RedOnion Frequent Poster

    Posts:
    1,380
    Last edited: Feb 13, 2018
    Just some context, if I understand correctly, EBS have always used the term base rate. Or at the very least since long before they had trackers. So if you're all right, potentially every EBS mortgage prior to 2008 was a tracker?

    They published a Home Buyers Guide in July 2002, where the following definition was included:
    "Base Rate: This is commonly used to refer to the mortgage lenders’ standard
    variable interest rate."

    Edit: I don't believe this is as black and white as some posters have suggested. Neither am I saying they are wrong. Just the amount of evidence required has to go beyond what's shown on thus thread.
    At the very least to get CBI to consider it, you would need to show that something influenced your decision at the time.
     
    Last edited: Feb 13, 2018
    RAzvan R likes this.
  5. gnf_ireland

    gnf_ireland Frequent Poster

    Posts:
    1,180
    I assume you mean 2002 here :)

    Maybe, but tracked against what? and what offset?

    This is key - proving x/y with absolute certainty will be difficult in a court. Realistically you will need to show that you were influenced by the line "variable base rate" but never questioned why it did not clearly state tracker and the percentage offset. This will be hard in my view, but not impossible.

    100% the same as this - and I have said the same in other redress threads. The low hanging fruit has already been taken off the tree with the CBI review - you now have to prove why you are wronged and why - but more importantly you need to show how you were wronged.
     
  6. RedOnion

    RedOnion Frequent Poster

    Posts:
    1,380
    Fat fingers! Fixed that.
     
  7. IdesofMarch

    IdesofMarch Frequent Poster

    Posts:
    312

    gnf_ireland, look up the term contra proferentum.
     
  8. gnf_ireland

    gnf_ireland Frequent Poster

    Posts:
    1,180
    Its not about what I think or care, its about what you can get the banks to agree or courts to order.
    So by all means take the court case and prove me wrong !!! I will honestly be delighted for you all.
    But this needs to move from AAM and into action - so people need to get their material together, formalise the complaint and see where it brings you.

    And the banks can also say "Caveat emptor". This will go around in circles until a decision is made on it
     
    RAzvan R likes this.
  9. IdesofMarch

    IdesofMarch Frequent Poster

    Posts:
    312
    Legal proceedings already underway in one instance. In another case, with the FSPO.
     
    RAzvan R likes this.
  10. B26354

    B26354 Frequent Poster

    Posts:
    171
    These cases have also been in and out of the central bank review since that whole process began. Hopeful that the review rules in our favour.
     
    RAzvan R likes this.
  11. gnf_ireland

    gnf_ireland Frequent Poster

    Posts:
    1,180
    and for the other cases, they need to make sure their complaint is lodged in a timely manner so they dont fall foul of any statute of limitation

    As I have said before, the low hanging fruit has already been agreed with the central bank. Its the tricky/fringe ones now, so will see how the review goes. I would not be surprised if the final answer is the bank and CB agree to put 1 test case through the courts as a trial and if successful the others in the same category would also be compensated.
    I see this going legal at some stage, as not everyone will accept the CB review findings
     
    RAzvan R likes this.
  12. haveaniceday

    haveaniceday Frequent Poster

    Posts:
    92
    Hi GNF-Ireland - on my post above I wasn't making an excuse for myself and you don't have to either :) I was using a broker - I asked him for the loan to be put on the tracker rate - he had previously set me up with a fixed rate loan offer - following this request he sent me a new loan offer from ebs with the fixed element removed and the variable base rate displayed - i had no reason to believe it should have said anything else? how would i ?- i trusted the broker and was fully confident that he knew what he was doing - thats it, end of story - when I was given the loan offer to sign i had no experience to know that it should have said ecb +XX% - the broker handled everything.
     
  13. haveaniceday

    haveaniceday Frequent Poster

    Posts:
    92
    ok so following on from the very helpful idea from GNF Ireland that it needs to be proven a variable rate was considered a tracker by ebs prior to end of 2008
    please see attached homebuyer guide from the ebs - go to page 36 and see variable rate defination?
    this is from ebs website may 2006
     

    Attached Files:

  14. B26354

    B26354 Frequent Poster

    Posts:
    171
    I don’t think this is a black and white issue; it’s my opinion that the rate definition we are discussing is ambiguous and should never have been used in a home loan offer in the first place. There is a legislation that favours a consumer when there are ambiguous terms used in contracts.

    The attached screen shot from economicshelp.org serves as an example of how ambiguous this term is. It can be referred to as a central bank base rate, a repo rate or a commercial banks SVR. The very definition of ambiguous!! And EBS did not help themselves or us customers by not including a definition of the “variable base rate” in the terms & conditions of loan offers.
     

    Attached Files:

  15. gnf_ireland

    gnf_ireland Frequent Poster

    Posts:
    1,180
    So is it the broker you should be challenging ?
     
  16. gnf_ireland

    gnf_ireland Frequent Poster

    Posts:
    1,180
    That definition does not even use the word tracker? They just treat a tracker as a sub-category of variable
    Variable Rate This means that the interest rate charged on the mortgage can go up and down over the life of the mortgage. If interest rates increase, your monthly repayment will increase accordingly. Similarly, your monthly repayment will go down if interest rates fall.
    I am not sure if that helps or hinders your argument to be honest, although if you specifically asked for a tracker and were told it was the prevailing variable base rate, given tracker is not defined in the booklet - maybe !
     
    RAzvan R likes this.
  17. gnf_ireland

    gnf_ireland Frequent Poster

    Posts:
    1,180
    ABSOLUTELY - but the question is now should customers get put on a low cost tracker a decade later as a result?
    They could do an AIB on it, and put them on a ECB+3.67% tracker, since no rate is specified !
     
  18. pguyo

    pguyo Frequent Poster

    Posts:
    69
    Hi gnf,
    I think that haveaniceday may be referring to the opening line on page 36 but I could be wrong.
    The interest rate is simply the cost of borrowing money. Interest rates change and in Ireland our interest rates
    reflect those set by the European Central Bank.

    I am not sure of the legalities of the word reflect?
     
  19. haveaniceday

    haveaniceday Frequent Poster

    Posts:
    92
    well if I have a variable rate - as per this guide and the ecb rate goes down my rate should go down - but instead it went up
     
  20. B26354

    B26354 Frequent Poster

    Posts:
    171
    SVR’s pre 2008 also followed the ECB base rate/repo rate.

    So ambiguity is established!
    A rate was specified in these contracts but no margin was included.Between 2004-2008 the rate included in these contracts matched the ECB rate + 1.25(EBS documentation confirms their margin on trackers was 1.25 for 95% LTV loans).

    At mid 2008 the SVR started to deviate from this rate. AIB & EBS have since confirmed that their SVR’s are now not linked to the ECB rate. But there is evidence on here and elsewhere that variable base rate increases & decreases followed ECB rate. Pre 2008, EBS sent letters to customers with the variable base rate definition confirming that the “ECB rate has increased xx% and therefore your repayment has increased xx%.” I am assuming these letters stopped or were reworded post 2008? I am wondering if customers who had EBS trackers at the same time also received the same correspondence? This could be another valuable piece of evidence.

    I also know of at least 2 cases where different brokers have provided written evidence that the variable base rate is a tracker or it is a rate that follows ECB base plus a margin.
     
    RAzvan R likes this.