Treasury Committee chairman writes to FSA about Bank of Ireland mortgage rises

Andrew Tyrie wants to know the financial regulator's thoughts on the increases in the bank's base rate tracker mortgages.

Andrew Tyrie, the chairman of the Treasury Committee, has written to regulator the Financial Services Authority (FSA) about Bank of Ireland UK’s decision to increase some tracker mortgage rates.

Customers with base rate tracker mortgages from either Bank of Ireland UK or its subsidiary Bristol & West will see their mortgage repayments increase from May.

This is because the bank is invoking a clause in the mortgage contracts that says it can increase the so-called ‘top-up’ element of the mortgage rate. This is the part of the overall interest rate that isn’t linked to the Bank of England base rate, which has remained at 0.5% for the past four years.

The rate for residential customers, who own just their own home, will rise from base rate plus 1.75% now to base rate plus 2.49% from 1st May. It will then increase again to base rate plus 3.99% from 1st October.

Meanwhile, buy-to-let customers will see their rate increased to base rate plus 4.49% from 1st May from its current base rate plus 1.75%.

Mr Tyrie’s letter has reportedly asked the FSA to consider whether these mortgages have mis-sold and whether the mortgage contracts contain unfair clauses.

Around 13,500 customers, mostly with buy-to-let mortgages, are affected by the changes. Bank of Ireland has said customers can switch to a different lender without incurring an early repayment charge.

Mr Tyrie has given the FSA until today (Monday) to respond to his letter.

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