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The Trackers Scandal - The largest scam ever perpetrated on customers in the Irish State?


This controversy involves thousands of mortgage holders not being offered a tracker rate when they came off a fixed-rate interest term, or being charged too much for one if they were. In a nut-shell, these customers are believed to have been wrongly denied a tracker rate mortgage in that they paid thousands of Euro more in interest than they should have.

Delivering its latest report, the Financial Regulator said the numbers caught up in the controversy have jumped by 23% to 13,000 in the last six months, and will rise further. Based on its challenges and the banks’ investigations, the regulator said it expected the total number of homeowners impacted by the scandal to rise significantly, possibly to over 20,000.

The Irish Taoiseach Leo Varadkar has described the behaviour of the banks as "scandalous" after it emerged that lenders are actively frustrating the efforts of regulators.

The Irish Government is devising a plan to hit banks with steep tax increases, after the Central Bank watchdog was accused of failing to use all its powers to resolve the trackers scandal.

Mr Varadkar warned that the Government is losing patience with the banks, which must restore the low-cost mortgages to those who should never have been deprived of them.

What is a Tracker Rate Mortgage?
A Tracker Rate Mortgage is basically a type of variable rate mortgage. What makes them different from other variable rate mortgages is that they follow track movements of another rate.

It can track below the rate it is following, but more commonly it tracks at a percentage above it.

As the rate is variable, you benefit from lower payments when the rate is low, but will suffer from higher payments if the rate being tracked goes up.

What are the consequences of not being offered the opportunity of a Tracker Rate Mortgage?
By not being offered a Tracker Rate Mortgage, it would be difficult to plan ahead for the future and budget from month to month in order to work out if you can afford your normal mortgage payment. Introductory tracker rates can be among the lowest variable interest rates you can get therefore by not being offered this then you are missing out on a potential cost-saving. Arrangement fees for tracker mortgages tend to be also lower than for fixed rates which is another missed cost-saving.

Should you be in a position to repay your mortgage, early repayment charges can be less expensive for tracker mortgages in comparison to fixed rates. Some mortgage lenders also offer a 'switch & fix' feature, which means you can change to one of their fixed mortgages if rates go up, without paying an Early Repayment Charge.

What should I do?
It is imperative that individuals take measures now to determine whether they were denied the opportunity to go on to a tracker rate mortgage. We would advise individuals to check their mortgage paperwork to determine and understand the agreements they have with their banks, and also the likely impact on their monthly income of being denied this opportunity.  Too often too many people take the ostrich approach to these kinds of matters, which are far too serious to ignore as a potential impact of being denied cost cutting opportunities could result in not being able to afford the mortgage payments meaning you may lose your property.

How can we help?
Since 2010, GDP Equity Experts have helped 100’s of families and BTL property investors deal with property debt related issues.  We are fully regulated by the FCA and have an incredible team who are here to help you today with any of the issues that might concern you with regards to this topic and other matters related to your debt position.

The clear trend over the last number of years is that those people who constantly review and have a very clear understanding of their monthly income levels and overall finances are better prepared and have much better outcomes when month to month costs increase for one reason or another.

If you have any queries in relation to anything in this piece or need some additional questions answered, our office would love to hear from you today.

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Darwin AllenComment