AIB reassures tracker mortgage customers over repayments

System

This discussion was created from comments split from: Will Ulster bank do deals or make a huge loss on Offset Flexible Tracker Mortgages..

Desertmoon1

https://m.independent.ie/business/personal-finance/i-cant-afford-this-and-i-wont-stand-for-it-new-bank-blunder-will-cost-homeowners-up-to-600-more-a-month-on-their-mortgages/a826147046.html has anyone seen this? Can they do this?

Technophobe

https://www.boards.ie/discussion/comment/120963891#Comment_120963891

Am affected by it and not happy..should not be allowed happen..has a big impact financially..considering cancelling my DD to AIB (and informing them of that) until it is resolved satisfactorily..

(note> never missed a payment before)

Liam O

https://www.boards.ie/discussion/comment/120964126#Comment_120964126

Never do this. Your credit rating will be destroyed.

What do you want them to do? You have an amount that needs to be paid by a certain date at a certain rate of interest? You've been paying less than you should have for years and if on a tracker even less than most again.

fliball123

https://www.boards.ie/discussion/comment/120964151#Comment_120964151

The discount that AIB got during the transfer of this persons individual tracker mortgage should come into the equation. If the discount is more than what was not paid by the individual then they should absorb the loss or chase Ulster bank for it.

Liam O

https://www.boards.ie/discussion/comment/120964176#Comment_120964176

Em, no. I don't think they're going to be writing off people's mortgages the same way they're not going to let it get to day 0 and still have 50k remaining.

fliball123

https://www.boards.ie/discussion/comment/120964257#Comment_120964257

They made a deal with Ulster bank with regards to the payments and the mortgage, the person who took the mortgage out had no say in the transfer of their mortgage now the figure is different to what Ulster bank sold AIB on. In my opinion and I reckon there will be some legal cases taken out but AIB will have to honor what they signed up for its not the individuals fault that UB made an b0ll0x of the figures and its not their fault that AIB did not do their due diligence when signing up for the mortgages portfolio all they seen was profit so they should take their share of the burden for being greedy little pigs and not going through the figures properly.

Liam O

https://www.boards.ie/discussion/comment/120964396#Comment_120964396

I may be reading it completely incorrectly but to me it seems like the issue is that Ulster were miscalculating the amount that it would take to pay down the mortgage on time. Under charging the customers. So by the time they reached the end of their 25 years or whatever, there would still be a chunk left.

The figure is not different. They have X years to pay Y amount at whatever interest rate. In order for that to be the case and not be stuck with a massive chunk of money at the end they need to increase the payments.

Now, as to whether there is potential redress due because of the loan not falling in line with what it should have and interest accruing incorrectly we will see but the people who this applies to will have been doing very well for themselves for years despite what tabloid verbiage Weston uses next.

Jim2007

Some more information:

https://www.rte.ie/news/business/2023/0811/1399270-aib-reassures-tracker-mortgage-holders-over-repayments/

Danzy

https://www.boards.ie/discussion/comment/120964151#Comment_120964151

The bank set the rate, their error, it should not be an issue for the customers.

AIB should ask a more capable Bank to train it on mortgages.

It's really incredible that a Bank should fail on such a basic and key part of its business.

Liam O

https://www.boards.ie/discussion/comment/120966230#Comment_120966230

I don't think you've read what the issue is in relation to and are just spewing out nonsense.

AIB has the highest number of mortgages in the country 😂

Gusser09

AIB might for the time being take a hit or be felxible. But no way do they not collect what is due at some stage.

Jim2007

https://www.boards.ie/discussion/comment/120966230#Comment_120966230

Here is the thing, the bank did set the rate but that is not the issue. And if you see the link I posted just a head of your comment you'll see the whole things now seems to be some kind of mistake.

As for Banks not making mistakes, that is simply not the case - they make mistakes all the time, some big and some small. Everyone makes mistakes at work, it is a fact of life. And as I always tell people, the person most interested your financial position is you and if you decide not to control and manage it, you should not be surprised if it becomes problematic.

As for it not being an issue for the customers, that is not correct. The repayment of a loan very rarely equates to the payment schedule exactly. There is always a recalculation and settlement at the end and in most cases you will either get a little back or have to a little more. And this is provided for in the T&C. If there are errors, missed payments, delayed payments etc... you could be in for a shock. So it is important for the borrower that the calculations and payments are up to date and as accurate as possible during the loan period.

charlesanto

My question, which was somehow lost in the merge of threads was ... (blunt and personal),

How should i react to this situation,..

Previous monthly repayment increase due to 0.5% increase resulted in €36 increase

Current increase based on a 0.25% increase is resulting in €101 increase in monthly payments.

I am not commercially or politically savvy, just a dull engineer trying to make ends meet.

Advice appreciated ...

Jim2007

https://www.boards.ie/discussion/comment/120967872#Comment_120967872

Well you are an engineer, so you should be able to do the math.... is the calculation reasonably correct, within the terms of the agreement you signed up to? If it is then you don't really have anything to complain about - it's what you signed up to. If it is not then you need follow up on it with the bank.

pat_sconce

https://www.boards.ie/discussion/comment/120964176#Comment_120964176

They got 4.8% discount on the entire book value. Considering the UB had a near 3% loss provision marked in and ECB rates were still at zero and trackers not very profitable, this effectively was full value.

That ecb rates have moved to 4% and trackers are currently extremely profitable has probably had an affect on aib's about turn.

For most it would have been a relatively small amount, but the media will highlight the largest possible figure for clickbait.

Technophobe

https://www.boards.ie/discussion/comment/120967389#Comment_120967389

Seems like they agree with you..So after "AIB reassuring" everyone that it was an issue with a subset of mortgages etc etc..

Got a phone call yesterday and whilst it was all apologies for any distress caused etc, it was of the vibe that "rest assured no change for September and October payments" but then to "someone being in touch about any required changes" at a later date..

Definitely got the impresson that there is more to come on this unfortunately....

I will be fighting them every inch if so...

Jim2007

https://www.boards.ie/discussion/comment/120982330#Comment_120982330

As I pointed out, if you read your T&C you should know that there will eventually be a settling up before the loan is cleared and your deeds are returned to you. So unless you have some kind of very unusual agreement it is not in your interests to under pay during the loan period and they probably won't put up much of an argument, because you will eventually need to settle it.

Technophobe

It's still not clear to me what has actually happened here though?

Were UB effectively undercharging durig the time my mortgage was with them?

If so, why was this not raised by either UB or AIB as part of the sale process and the notifications of the mortgage transfer to customers? There are definitely shortcomings there at the very least, no?

And for those that had chosen to pay a lump sum off their mortgage in the last few months of their time with UB, were they effectively and unknowingly mitigating the actual UB error amounts to no one's benefit really but UB's?

Jim2007

https://www.boards.ie/discussion/comment/120983906#Comment_120983906

What AIB did or did not do when taking over the mortgages has no bearing on your mortgage. If they get it wrong it’s between them and their shareholders. You and they have to honor the loan agreement you both signed.

As I pointed out earlier, nobody can tell how interest rates will move over say 30 years, nor the number of late or missed payments or lump sum payments there will be, so all figures are provisional until the loan is settled. It’s in the interests of both parties that the calculations are as accurate as possible over the period to avoid nasty surprises at the end.

The first article I read suggested that they had discovered an error in the calculations to date for a certain group of customers and had corrected it as would be expected and informed the customers concerned. The second article I came across suggested that there was no error in the original calculations and the entire exercise itself was a mistake.

All in all I doubt it will make much difference overall to the final settlement of your mortgage.

murphaph

I am one of the customers affected. Mortgage balance ca. 8k. Monthly repayment currently €501.04. Before the last 0.25% increase it was €500.04, so a 0.25% increase led to a €1 increase. So I was more than a little shocked to see AIB wanting the same 0.25% increase to drive my repayment up to €554, a 54 fold increase over UB! My UB/AIB mortgage is as vanilla as it gets...never once missed a payment, never once overpaid it.

In comparison I have a far more complicated mortgage linked to a savings account product from my German building society. It has recently been converted to a simple annuity mortgage and despite the complexity (including clawed back tax relief on the savings account because it ran for less than 7 years) it all balances correctly to the cent. I have a table of repayments that shows exactly how much interest and capital I will repay every month for the next 9 years on the annuity mortgage. That is standard practice here. I have a fixed rate of 3% for 10 years but I can overpay 5% of the original loan amount per calendar year if I wish. A new repayment schedule showing the shortened term will be issued on demand but you can just use an online amortisation tool to show you the same table.

Irish banks seem to make mistakes alarmingly often. They probably invest far too little in automation and leave more of this stuff in the hands of humans.

Jim2007

In the case of your Irish mortgage, are the adjustments in line with you agreed T&C of the loan and would you prefer to discouver at the end of the mortgage that you still owed several thousand Euros?

I have some experience of German banking operations and they most definitely make errors, some times whoppers that would make the BOI outcome look like a success!, You are not comparing like with like. The terms and conditions of the products are very different, in particular German contracts did not include provisions to recalculate, adjust repayments and recover losses, but they are learning.

murphaph

Yeah I am not going to make claims for the entire German banking sector, especially not for the oversight given the wirecard debacle but I still hold firm to the belief that German banks are (in their day to day operations) more competent than Irish banks. YMMV. The AIB issue is a clear mistake on their end Jim. The outstanding balance on the UB/AIB mortgage will be cleared exactly as predicted by Ulster Bank according to my own calculations.

Have you seen the letter in question? It makes no mention of a mistake by Ulster Bank causing our repayments to jump or any changes to the terms. It is a standard ECB rate increase letter, except that the increase (in my case) is just over 54 times what it should be in absolute terms. It's "only" €53 a month in my case because that mortgage is almost mature but for some others it was hundreds of Euro more, with zero explanation as to why their repayments were suddenly to jump by very significant amounts, amounts that could put some people underwater.

When people called AIB about this they were ready for the question and the answer was that UB had messed up calculating the repayment schedule for years. That answer must have been sanctioned at a very high level within AIB. I do not for one second believe that some mid level customer services manager decided to blame another bank for this. Nobody that low down would put their neck on the block like that. AIB persisted with this excuse (lie) until people contacted the press (perhaps AIB inadvertently caught some journalists with this) and within 3 hours of the article appearing in the Independent AIB had "clarified" the situation on their website and claimed that the repayments would not be changing after all.

The fishiest thing is that this anomaly seems to have only affected a subset of the mortgages (including ones like mine that have never had a missed or over payment) and many reports online suggest it's mortgages that are maturing sooner rather than later, so the sums are mostly "small beer". This is a world where VW and Tesla manipulate their software to defraud customers of such "small beer". I can certainly believe that AIB (given their history) may not have simply made an honest mistake here, but for the moment I will give them the benefit of the doubt on that. By all accounts AIB are somewhat overwhelmned by the workload and Mars Capital are being contracted out to help. Some people are reporting that their now AIB mortgage DDs are being taken by Mars Capital and not AIB. AIB says that they will be taking the DDs themselves in the near future. It's possible that Mars Capital has correctly worked out the repayments and AIB itself has not. I expect a CB investigation into this farce at the very least, so we find out exactly what happened. If it wasn't for a newspaper article, AIB would still be persisting with this nonsense.

Technophobe

https://www.boards.ie/discussion/comment/120999172#Comment_120999172

100% correct..and yet we still have people who will happily let the Banks away with this sort of thing...People should should ponder why we are paying taxes such as USC etc....