Tracker Mortgage Decision Reference 2022-0426

• Case Outcome: Rejected
• Reference: 2022-0426
• Date: 19 December 2022
• Year: 2022
• Subject Matter: Tracker Mortgage
• Finantial Sector: Banking
• Conducts Complained Of: Failure to offer a tracker rate throughout the life of the mortgage,Arrears handling -Mortgage Arears Resolution Process

Decision Ref:

2022-0426

Sector:

Banking

Product / Service:

Tracker Mortgage

Conduct(s) complained of:

Failure to offer a tracker rate throughout the life of

the mortgage

Arrears handling - Mortgage Arears Resolution

Process

Outcome:

Rejected

LEGALLY BINDING DECISION OF THE FINANCIAL SERVICES AND PENSIONS OMBUDSMAN

Background

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

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

the Complainants’ buy-to-let property.

The Letter of Offer dated 28 July 2008 in relation to mortgage loan account ending 3116

described the loan type as “BuytoLet Variable Annuity” and the interest rate applicable

was 5.7%. The loan amount was for €180,000.00 and the term of the loan was 19 years.

The Complainants’ Case

The Complainants submit that they approached the Provider in December 2006 seeking

mortgage loan finance to build a principal private residence for the Second Complainant.

The Complainants outline that they drew down mortgage loan account ending 3033 on 29

January 2007 in the amount of €150,000.00 on a tracker interest rate of ECB + 0.95%. The

Complainants outline that the product was described as “Tracker3 Home Mortgage <60%

LTV interest rate of 4.45%”. The Complainants state that they assumed that this related to

a principal private residence product given the reference to “Home Mortgage”.

- 2 -

/Cont’d…

The Complainants submit that they approached the Provider in March 2008 seeking a top-

up loan in the amount of €30,000.00 for mortgage loan account ending 3033. The

Complainants state that they assumed that the top-up loan would be issued on the tracker

interest rate of ECB + 0.95% however, the Provider confirmed that they both signed a buy-

to-let mortgage on a variable interest rate of 5.7%.

The Complainants assert that “this property has never been used as an investment property

nor was it ever intended to be.” The Complainants state that the property was built on

family land and “never has been rented to anybody” and that the Second Complainant has

resided in the property since it was built.

The Complainants question why they were not offered a tracker interest rate on their top-

up loan as the Provider has “confirmed that tracker mortgages were still being made

available up to October 2008.” The Complainants contend that they were unaware of the

nature of the agreement and assert that the Provider “changed the mortgage agreement

to a more expensive 5.7% Buy to let variable rate”.

The Complainants submit that they accept that they signed the top-up mortgage loan offer

but that they were unaware that the tracker mortgage “was being taking away”.

The Complainants are seeking the following:

a) The tracker interest rate be reinstated on their mortgage loan account;

b) Refund of overpaid interest backdated to August 2008; and

c) Compensation for the “years of duress caused by the [Provider’s] actions.”

The Provider’s Case

The Provider outlines that the Complainants approached the Provider seeking funds to

build an investment property on 19 December 2006. The Provider submits that it was not

aware that the mortgage loan was for the construction of a private dwelling house (“PDH”)

for the Second Complainant. The Provider refers to the “lender’s report” dated 19

December 2006 which shows that the site for the proposed property was a gift from the

First Complainant and the title deed was to be registered in the sole name of the Second

Complainant.

The Provider outlines that according to the Provider’s records, the Second Complainant

had insufficient repayment capacity and the mortgage loan was assessed and approved as

an investment buy-to-let property (“BTL”) taking into account the proposed rental income

that was to be generated from the property, “in addition, the “overall strength” of the first

named Complainant’s repayment capacity which was evident from the rental income

generated from his existing BTL Mortgages.”