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Group launches challenge to Permanent TSB tracker mortgage move

The ‘Protect Our Trackers’ group says a decision to terminate their interest-only periods is a breach of contract.

A GROUP OF mortgage holders have launched a challenge to Permanent TSB’s decision to terminate the interest-only period of their mortgages – a move they say amounts to a breach of their mortgage agreements.

The group, called ‘Protect Our Trackers’, has launched an information campaign to highlight the change in Permanent TSB’s mortgage policy, where buy-to-let customers will be told they must change to a capital-and-interest repayment model or face the loss of their tracker mortgage policy.

Losing their tracker mortgage would see customers transferred to an interest-only fixed rate model, which is currently pegged at 3.1 per cent for the first two years before then being subject to change.

The 3.1 per cent preferential rate is already much higher than the current tracker rates, which are typically 1 per cent higher than the ECB’s own rate (currently 1.25 per cent).

Customers who borrowed €300,000 on a 25-year loan in 2005 would have paid €525 per month in interest-only repayments, prior to last week’s move by the European Central Bank to increase its main interest rate.

Protect Our Trackers said that if the same customer was forced to then begin repayments on the capital sum of their loan, their obligations could rise to €1,600 per month – a threefold increase.

The group said it believed that Permanent TSB could take up to 12 months to communicate directly with its affected customers – meaning some of them may not otherwise find out about the changes until November 2011.

It also said it had been advised by a senior counsel that the decision to terminate the interest-only period constituted a breach of Permanent TSB’s agreement with customers.

In a statement of its own, Permanent TSB said the move was only directed at customers with investment properties, and had “nothing to do with customers whose mortgage is their main home.”

The decision was a statement to customers that the reduction in property prices meant it was time to begin repaying the outstanding capital on their loans.

Permanent TSB said it was “entirely within our rights in doing so, and will defend any actions taken on that basis.”

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