THE CHIEF EXECUTIVE of AIB, Bernard Byrne, has told an Oireachtas Committee that 14 AIB customers lost their home because of high interest rates handed down by the bank.
The comments were made during a Joint Committee on Finance, Public Expenditure and Reform.
The bank said that based on the information they currently have, these people lost their home because of the high rate that was imposed upon them by the bank.
The bank said that they were engaging with those concerned towards a solution, but it was pending appeals and investigations into the issue.
Earlier this year, it was discovered that the bank failed to ensure its tracker mortgage customers were paying interest at the low rates to which they were entitled.
The bank apologised, saying that “we fell short on our obligations to some customers” and said they would look at compensating those who lost out.
What’s a tracker mortgage?
A tracker mortgage is a home loan with an interest rate set at a percentage above the fluctuating European Central Bank (ECB) rate. This type of mortgage has its pro and cons.
Let’s say your rate is set at one percentage point above the ECB rate. If the official rate drops by a percentage point, your mortgage interest bill also drops and you pay less to the bank.
However, if the ECB rate increases by a few percentage points, your rate will ‘track’ along with it and your payments will also go up to match the change.
Banking issues
Also discussed in the Oireachtas Committee today were court cases related to home repossessions and crowds of people queuing outside for the chance to buy a home.
Senator Rose-Conway Walsh (Sinn Féin) questioned Byrne about the amount of customers the bank was engaging in (over half of customers online, they answered), and on closing branches in rural Ireland (they had to make savings, they explained).
Senator Kieran O’Donnell (Fine Gael) questioned the bank over the individual sample cases of how mortgage rules are applied, and the controversial first-time buyers grant.
The AIB chief said the first-time buyers grant would bring confidence into the construction sector to build more houses, and solve the supply of houses problem.
When asked by Senator O’Donnell “Do you think the sun is shining in AIB at the moment?” Byrne replied that he didn’t think the sun was shining and that they had a lot more work to do.
In his opening statement, Bernard Byrne said that he was ”conscious of the need to treat customers fairly”.
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