The Issues include:
- Wrongfully applying the incorrect interest rate to your loan/mortgage
- Wrongfully removing you from your tracker interest rate
- Wrongfully coercing and cajoling you off a tracker interest rate as part of a “restructure” of your loan or mortgage
- Wrongfully not renewing your tracker interest rate
Similar issues arise with fixed interest rate loans.
Tracker Interest rate loans
A tracker interest rate loan is an interest rate applied to your loan which consists of a fixed margin that the banks charge above the Euribor interest rate. The Euribor (Euro Interbank Offered Rate) rate is a daily reference rate published by the European Money Markets Institute and is calculated based on the average interest rates at which Eurozone banks offer to lend funds to other banks in the euro wholesale money market.
Generally, the Euribor rate applied to mortgages is the 3 monthly Euribor rate. However, most if not all letters of Loan Offers do not specify that it is the 3 monthly Euribor rate and therefore the customer could argue that the monthly more favourable Euribor rate applies. In accordance with the contra preferentum rule the customer would be entitled to the most favourable interpretation of the contract where there is any ambiguity.
The margin applied varies from bank to bank and with each loan. The margin is particularised in the Letter of Loan Offer and generally is stated as follows:
“The interest rate shall be no more than 1.2% above the European Central Bank Main Refinancing Operations Minimum Bid Rate for the terms of the loan”.
In order to establish the correct interest rate to apply to your loan you look up the Euribor interest rate for the month/term in question and then add the bank’s margin to ascertain the interest rate on your loan for the following month or quarter as the case may be. The Euribor rates are published on www.euribor-rates.eu
Mistake– People wrongfully assume that a tracker interest rate loan is a fixed interest rate loan. NO. A tracker interest rate loan is a variable interest rate loan which may go up or down. It varies depending on a benchmark interest rate, in this instance the Euribor which has been close to zero or below zero for approx 10 years.
Fixed Interest Rate Loans
A fixed interest rate is an interest rate on a loan or mortgage that remains the same for the entire term of the loan or for part of the term.
There are advantages and disadvantages to a fixed interest rate loan. Low fixed interest rate loans are extremely advantageous for customers and includes certainty in relation to your monthly repayments for the term of the loan and avoiding any interest rate increases as interest rates rise.
Lost your “Tracker” or Fixed Interest Rate Loan- Remedies
In the first instance you must check your Letter of Loan Offer and check if you had the benefit of a tracker loan or a fixed interest rate loan.
If you wrongfully lost your tracker interest rate or fixed interest rate or had the wrong interest rate applied then you are entitled to restitution and compensation.
Restitution- This is the sum of money the bank wrongfully deprived you of when it removed you from your tracker or fixed interest rate or applied the incorrect rate.
Compensation- Compensation and damages depends on many factors. It is incredulous that the Central Bank would even consider allowing the banks determine the level of compensation they should give affected customers. This is akin to asking a convicted bank robber to determine his own jail sentence.
The issues in deciding compensation should include-
– The extent of the financial loss
– The duration of the misconduct
– The impact of the loss of money on the customer
– The impact on the family of the customer
– The conduct of the bank in dealing with the customer
– Whether the customer was subjected to legal proceedings by the bank
– Whether the customer lost their home and or their investment properties.
Swaine solicitors firmly believe that punitive damages should be awarded in each and every case due to the nature and extent of the type of misconduct involved.
Wrongfully moving customers off their tracker interest rate or their fixed interest rate or applying the wrong rate is a breach of contract and you are entitled to take legal proceedings to obtain restitution and damages.
If you believe you have been affected Swaine Solicitors will review your documents for FREE and if you have a claim we will prosecute a case on your behalf on a no foal no fee basis. www.swainesolicitors.ie e-mail: [email protected]