Permanent TSB has backed down on plans to force buy-to-let customers off tracker mortgages as legal action by furious investors looms in the HIgh Court
Its decision comes as customers challenging PTSB’s decision to force people off trackers in a class action learn their case will be held in the High Court on October 17.
The decision will be a relief to many of the 18,000 customers who this spring were told by the lender they had the right to force them off their tracker mortgages.
Only those who switched from interest only trackers to capital repayments were allowed hold on to the preferential deal.
The lender is now writing to customers to tell them they have until next February to decide how to manage their repayments.
It is still encouraging buy-to-let customers to pay off their capital, it will allow people stay on trackers with some provisos.
The problem for investors who bought second and third homes is that rental income has fallen and for many that can mean it no longer meets the mortgage, putting pressure on owners who are already struggling with their monthly outgoings.
PTSB will now allow customers to stay on trackers but extend mortgage terms, which ultimately would cost borrowers more but would greatly reduce their monthly repayments.
It will also change the rate of the original tracker mortgage – so for example if a borrower signed up to a rate of 0.75% above the ECB rate, Permanent TSB may double that to 1.5%.
Both options will significantly increase the lifetime cost of the mortgage but will still mean the monthly burden is cheaper than capital repayment.
When Permanent TSB announced plans to force buy-to-let investors off trackers earlier this year, it prompted a storm of protest. Solicitors Walter Odlum Co wrote to the lender on behalf of a group of borrowers and threatened it with legal action if it did not reinstate loan agreements for investors on tracker rates.
Protect Our Trackers campaign was launched in April this year to challenge a unilateral decision by Permanent TSB (PTSB) to terminate the interest-only period of their mortgages.
