Tracker Mortgage Customers Ousted; Banks Use Underhand Tactics to Boost Their Profits

Daily Mail (London), April 10, 2009 | Go to article overview

Tracker Mortgage Customers Ousted; Banks Use Underhand Tactics to Boost Their Profits


Byline: Aiden Corkery Political Reporter

GREEDY banks are tricking desperate homeowners into giving up their cost-efficient tracker mortgages, the Financial Regulator warned yesterday.

Irish banks stopped offering tracker mortgages to customers last summer as they began losing thousands of euro on them due to record low interest rates.

But now the Financial Regulator has learned that some unscrupulous banks are trying to get rid of their remaining tracker mortgages when existing mortgage holders approach them after losing their jobs or seeing their wages cut back.

In many cases, these worried homeowners are being told they will have to change to a fixed or variable mortgage if they want to reschedule their repayments to a more affordable level.

'We have some information from consumers, and indeed mortgage advisers, that when some consumers have been approaching their institutions they have been advised that "Yes, we can help you but you must switch out of your very advantageous tracker mortgage",' acting chief executive of the Financial Regulator Mary O'Dea told the Oireachtas Economic Regulatory committee yesterday.

'Obviously a tracker mortgage nowadays is a very, very special product. It's one that has a very big advantage for consumers. It does cost financial institutions money - but they sold them in the first place to consumers,' she said.

Financial Regulator chairman Jim Farrell said the issue was a 'very serious matter' and would be tackled by the banking watchdog.

'We certainly would be very much of the view that banks should not take advantage of consumers by taking them off the lower-rate tracker mortgages in cases where they get into difficulty,' he said. 'Moving people off tracker mortgages should be a no-no.' Miss O'Dea said the Financial Regulator was now analysing mortgage data to see how widespread the practice was.

Under Irish law, banks or bank officials who are found to have sold customers a product that is not suitable for them can be fined or disqualified.

Independent TD Joe Behan accused the banks of trying to take advantage of people in their hour of need..

'These people are trying to renegotiate their mortgages having lost their jobs, but the banks are turning it into a money-making opportunity,' he said. 'In light of the great difficulties the banks have caused us as a nation, for them to be engaged in this practice is unbelievable.'

Deputy Behan pointed out that banks are already penalising fixed-rate mortgage holders who want to switch to less punishing variable-rate mortgages in order to take advantage of the low interest rates. …

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