The lender, and its subsidiary Bristol & West, announced this week that they will increase the rate on their Base Rate tracker mortgages, despite no move in Base Rate. Borrowers with residential mortgages will pay Base Rate plus 2.49 per cent from May, up from Base plus 1.75 per cent. From October, this rate will go up again to Base Rate plus 3.99 per cent.
Buy-to-let customers will also see their rate rise to Base Rate plus 4.49 per cent from May.
It is an outrageous move. If you are on a base rate tracker, the margin should stay constant throughout, and it certainly shouldn’t go up if there has been no increase in Base Rate. I would expect borrowers to fight this decision, as it is a far cry from treating customers fairly.
Bank of Ireland have clearly found a loophole, which they can exploit but it is highly unlikely that other lenders will follow suit. Having said that, borrowers need to be vigilant and keep an eye on their mortgage rate. If your lender hikes it for no reason, it might be time to move, assuming you can.
The good news is that there are some excellent remortgage deals available; indeed, we are seeing some of the cheapest mortgage rates ever. However, not everyone will be in a position to take advantage of such deals so it is important to seek advice from an independent broker to see where you stand.