A mortgage interest rate increase complaint has resulted in a successful conclusion for a Dublin couple at the High Court.
Kenneth and Donna Millar of Portmarnock, County Dublin, made an appeal to the High Court after a mortgage interest rate increase complaint against their bank was rejected by the Financial Services Ombudsman. The Millars had complained to the Ombudsman that the Danske Bank (formerly the National Irish Bank) had increased the rate of interest on their six variable rate investment mortgages and on the personal mortgage for their family home.
The couple complained that their lender had raised the rate of interest to 4 percent in November 2011 at a time when the Central European Bank´s rates of interest were at a historic low. They believed that, under the terms of their mortgage agreements, the bank was only entitled to increase or decrease the rates of interest on their mortgages “in line with general market interest rates”.
However, when the Millars made a mortgage interest rate increase complaint to the Danske Bank, they were told that European Central Bank had no influence over what the bank could charge. The couple escalated their mortgage interest rate increase complaint to the Ombudsman, who rejected it on the grounds that their mortgage agreements stated the bank would alter the rate “in response to market conditions” and not “in line with general market interest rates”.
The Ombudsman said that the distinction in the phrasing of the clause was significant and indicated that the Danske Bank did not have to maintain rates of interest in line with those charged by the European Central Bank. The Ombudsman also agreed with Danske Bank that it did not have to release details of how risk assessments were conducted on Kenneth and Donna Millar.
The Millars were not prepared to give up on their mortgage interest rate increase complaint and appealed the Ombudsman´s decision to the High Court. There, before Mr Justice Gerard Hogan, they argued that the information given to them when they took out the first of their variable rate mortgages in 2009 was that “When interest rates go down your monthly payments do likewise. However, when interest rates rise, your monthly payments will increase too”.
Mr Justice Gerard Hogan agreed with the Millars mortgage interest rate increase complaint and said that the text of the clause was ambiguous in the “general factual background against which the contract was entered into”. The Judge dismissed the Ombudsman´s decision on the complaint and instructed the Ombudsman to review it again “in a manner not inconsistent with this judgement”.
What the Case Means to Other Variable Rate Mortgage Holders
Approximately 207,000 mortgages in Ireland are variable interest rate mortgages like the Millar´s – and although Mr Justice Gerard Hogan did not rule that Danske Bank were in breach of contract, his verdict in the case offers the opportunity for other variable rate mortgage holders in Ireland to complain about any unjustifiable increases in the rate of interest, knowing that there is a precedent to support the complaint.
If you are one of the 30 percent of the Irish mortgage market that has a variable interest rate mortgage, and you would like to know more about making a mortgage interest rate increase complaint, contact our 24 hour helpline and speak with a solicitor in confidence. We cannot guarantee every mortgage interest rate interest complaint will have a successful conclusion, but we will be able to advise you of your options and whether you have a complaint which is worth your while to pursue.