Tracker Mortgage Decision Reference 2021-0292

• Jurisdiction: Ireland
• Case Outcome: Rejected
• Reference: 2021-0292
• Year: 2021
• Date: 31 August 2021
• Subject Matter: Tracker Mortgage
• Conducts Complained Of: Failure to offer a tracker rate throughout the life of the mortgage
• Finantial Sector: Banking

Decision Ref:

2021-0292

Sector:

Banking

Product / Service:

Tracker Mortgage

Conduct(s) complained of:

Failure to offer a tracker rate throughout the life of

the mortgage

Outcome:

Rejected

LEGALLY BINDING DECISION

OF THE FINANCIAL SERVICES AND PENSIONS OMBUDSMAN

The complaint relates to a mortgage loan account held by the Complainants with the

Provider. The mortgage loan account which is the subject of the complaint was secured on

the Complainants’ buy-to-let (“BTL”) property.

The loan amount was €100,000 and the term of the loan was 25 years. The Mortgage Loan

Offer Letter which was signed on 29 June 2007 outlined that the interest rate applicable to

the loan was a 24-month fixed rate of 4.79%, with a tracker interest rate of ECB + 1.10% to

apply thereafter.

The Complainants’ Case

The Complainants detail that an ECB tracker interest rate applied to their mortgage loan

account ending 7462 which was secured on their BTL property.

They detail that they “went into arrears in the Spring of [2018] and brought it to the

attention of [the Provider] that we were selling our PDH after a marriage split and with

circa €400,000 in equity in the house we would be in a position to clear this mortgage in

full.”

- 2 -

/Cont’d…

The Complainants submit that they asked the Provider to accept interest only repayments

on mortgage loan account ending 7462 for a year, “by which time we would expect that

our PDH would be sold and we would pay off the mortgage in full”. The Complainants

submit that the Provider agreed to their request but only on the condition “that we agreed

to move off the ECB tracker rate to a standard variable rate”.

The Complainants submit that they complained to the Provider’s complaints department

“about what we thought was the opportunism of this decision” but their complaint was

“denied” by the Provider.

At the time of making the complaint in 2018 the Complainants wanted the Provider to

grant the alternative repayment arrangement but allow the mortgage to remain on the

tracker interest rate.

The Provider’s Case

The Provider submits that it issued a Mortgage Loan Offer Letter to the Complainants on

26 June 2007 which was signed and accepted by the Complainants on 29 June 2007. It

states that the mortgage loan account was drawn down on 24 July 2007.

The Provider states that the Loan Offer Letter provided for interest only repayments for

the first 7 years with capital and interest repayments to commence thereafter. It states

that as per the Loan Offer Letter, the Complainants were obliged to repay both the capital

and the interest on the mortgage loan account. It states that by seeking to pay interest

only, the Complainants were seeking to vary the terms and conditions of the Loan Offer

Letter. It refers to Condition 4(d) which specifies that the Provider “may at its absolute

discretion, and with the consent of the Borrower, vary any payment of principal, interest or

any other amount payable in respect of the Loan”. It states that therefore the Provider will

not amend any such terms and conditions without the express consent and agreement of

the Complainants.

The Provider submits that it implemented a new pricing policy in late 2012 in respect of

non-CCMA (BTL) customers who were availing of tracker interest rate mortgages. The

Provider details the following in respect of its pricing policy:

“The Provider made a commercial decision to implement a pricing policy change in

respect of Buy-to- Let mortgage loans. As part of a financial review, if a change of

terms and conditions is deemed appropriate (e.g. Interest Only), the Buy-To-Let

Tracker customer will be offered a new Standard Variable Interest Rate mortgage

for the life of the loan, which is initially priced at 1% above what they are currently

paying on their tracker mortgage.

- 3 -

/Cont’d…

This standard variable interest rate will be at the discretion of the Provider and will

be influenced by market interest rates and can move up or down over the life of the

mortgage. The tracker status of the loan ends completely on taking up of new

amendments to the terms and conditions. Buy-To-Let Tracker customers who do not

amend their terms and conditions continue on their existing tracker interest rate.

Exclusions from the policy applied for capitalisations of arrears, customers who had

agreed consensual asset disposal due to financial distress or those customers

entering a personal insolvency arrangement. In 2014, exclusions were expanded to

include customers with sales at shortfall/residual debt.”

The Provider has outlined the following interactions with the Complainants in respect of

the mortgage loan account:

- Following the move to capital and interest repayments from 2014, the mortgage

periodically entered arrears which were occasionally cleared with the payment of a

lump sum.

- On 18 November 2015, the Second Complainant outlined the terms of the

Complainants’ separation agreement to the Provider, whereby the Second

Complainant would retain ownership of the properties mortgaged with the

Provider. The sale of properties would be sought to clear debt; however, the sale of

the properties would not be possible until the separation was finalised. Rental

income from other properties would be used to maintain payments on the

mortgage loan account.

- On 24 May 2016, the Provider received correspondence from the Second

Complainant advising of their intention to put their primary residence on the

market and for the proceeds of sale to be used to clear the balance of the subject

mortgage loan account.

- On 16 March 2017, the Provider had a telephone call with the First Complainant

who advised that arrears on the “mortgage account would be cleared within 4

weeks following sale of one of their investment properties”. The Provider states that

the First Complainant was advised “that enforcement action could be forestalled if

a solicitor’s letter of undertaking guaranteeing arrears will be cleared within 4

weeks and full repayments made until private dwelling house is sold.”

- On 24 February 2017, a Calling in Debt letter was issued to the Complainants.

- During a telephone call with the First Complainant on 20 March 2017 the Provider

was advised that the sale of the Complainants’ primary residence “was expected to

happen in May/June 2017 with balance of mortgage loan account cleared from

proceeds” and “there is no need to appoint a receiver in such circumstances”.