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Mortgage u-turn: BOI has written to 1,200 customers to say their tracker rate will not be hiked Bank of Ireland has written to 1,200 of the 13,500 homeowners who were hit with increases on tracker deal repayments they believed were fixed at a certain level above base rate for life, to tell them they will no longer face the hike. The tracker deals - linked to the historically low Bank of England base rate - doubled at the start of this month. BOI, which has been challenged over the move, announced this morning it had identified and written to two groups of customers where it will not be applying the increase to their base rate tracker mortgage.These included 1,000 homeowners who were using flexible facilities on their mortgage account and ‘received a specific administrative letter linked to their transactions that might have caused some customers to believe the differential was for the term of their mortgage’. The second group of around 200 customers were those who had switched their mortgage to a base rate tracker. It said the customers received documentation saying rates could change but their mortgage conditions did not detail the circumstances under which this would happen. The bank said the Financial Conduct Authority was supportive of its approach in excluding these customers. Des Crowley, chief executive of BOI UK, said: ‘We have said from the outset that we will review all customer complaints individually and that we are committed to treating customers fairly throughout the process. It is on this basis that we have removed these customers.’ More... Bank of Ireland's mortgage tracker increase 'may be illegal' 'I've been left to fight Bank of Ireland in court:' Financial watchdog rocked by record complaints but thousands won't get help Can you find a better rate? Mortgage tables Andrew Tyrie, chairman of the Commons Treasury Select Committee, strongly criticised the bank’s decision to raise its margin over base rate from 1.75 per cent to 3.99 per cent, which has added hundreds of pounds to monthly repayments for thousands of customers. Customers were told of the decision to raise their rates earlier this year. Many had taken out loans with BOI subsidiary Bristol & West. The move still leaves more than 12,000 customers with a steep rate hike - having believed they would stay low because they were linked to the Bank of England rate, currently 0.5 per cent. BOI has told them it was changing the ‘differential’ it applies to the tracker rate. A typical change has seen a buy-to-let mortgage holder previously on a rate of 2.25 per cent - made up of the base rate plus 1.75 per cent - rise to 4.99 per cent, representing the bank rate plus 4.49 per cent. For residential customers, changes will be introduced in two stages. From this month, they will pay the Bank rate plus 2.49 per cent. On October 1, it goes up to Bank rate plus 3.99 per cent - currently 4.49 per cent. BOI blamed the significant increase in the cost of funding these mortgages since 2008 and the need for banks to maintain greater levels of capital. This is Money has asked BOI how the costs have increased, when in 2008 base rate, Libor and swap rates were far lower than they are today. We are currently awaiting a response. It said customers were free to move to other providers and that no early repayment charges would apply. Most of those affected had buy-to-let loans. Today, a bank spokeswoman declined to comment on how much it was paying for its change of heart over some of the customers who were affected.