ROUND 100,000 mortgages sold to vulture funds are now hit by some of the biggest mortgage rate hikes in the country.
Borrowers must pay interest rates of up to 7 percent while being denied the ability to lock in to lower fixed rates.
Consumer advocate Brendan Burgess accused the central bank of “throwing these people to the wolves” and said people whose loans were sold are now “mortgage prisoners”.
A couple told the Irish Independent they felt at the mercy of the vultures and had never been behind. “We did everything we could to keep payments going on our home with three young children,” they said.
Some borrowers whose loans were sold have been told their mortgage rates will rise to as much as 7.09 percent, prompting fears of a massive spike in arrears. One borrower says his monthly repayments have increased from around €200 to €700 a month.
Rates of up to 7 percent have not been seen in years and are multiples of the European Central Bank’s rate.
Mortgage holders sold to vultures have no way of setting their interest rates. Instead, they rely on floating rates, which have risen many times over this year, well in excess of the ECB’s rate hikes.
There have been calls in the past for vultures who bought mortgages to be regulated.
The loans are serviced by companies like Start and Pepper, which are regulated, but interest rate decisions are made by the unregulated vultures who own the loans.
Borrowers whose loans were sold were repeatedly told by the central bank and Treasury that they would keep the original mortgage terms.
This led many to believe that they would still have the option to sign up for fixed rates and would retain more attractive rates, such as B. managed loan-to-value ratios they had with their original lender.
But now they’re being hit by a string of mortgage rate hikes and more to come as the European Central Bank (ECB) is set to announce another 0.5 percentage point hike next week.
A letter from the Irish Independent, sent by Start Mortgages, informs a mortgagor that the interest rate will rise to 7.09 percent in January. “Start Mortgages is not offering any new lending products,” the letter adds, explaining why it is not offering a fixed rate option.
Not everyone whose mortgages are serviced by Start has such high rates. Some Pepper variables have risen as high as 6.5 percent.
Consumer advocate Brendan Burgess said there was no justification for charging such high fees.
Many of the mortgages sold had split agreements because they were having trouble making full payments. Part of the loan is reserved for later repayment.
Borrowers said they were told by their original lenders that these loans would not be considered non-performing.
Mr Burgess said people whose loans have been sold are “mortgage prisoners”.
He claimed the central bank forced key lenders to sell all loans that failed to make full payments, including split mortgages.
“I was horrified when the central bank forced Permanent TSB to sell perfectly split mortgages to Pepper.
“The central bank simply completely ignored the interests of the borrowers involved.
“These customers are now paying 6.5 percent and up, whereas with PTSB they could have been fixing 3 percent,” said Mr. Burgess.
Many of the borrowers whose loans are owned by vultures are now being catapulted into arrears “directly by central bank actions,” he said in a letter to central bank governor Gabriel Makhlouf.
Mr Burgess told him: “The central bank really needs to act now. “You have unnecessarily caused the problem. Now you should fix it.”
Pepper said it doesn’t offer fixed rates to those whose mortgages it services because it acts as a lender or originator, but rather as a loan servicer.
“One important option for people is refinancing with another lender, which encourages them when people think they can get a lower interest rate,” it said.
When asked whether the borrowers whose loans were sold had been deceived, the central bank did not respond.
It said it could not comment on its oversight engagement with any individual company.
https://www.independent.ie/business/personal-finance/property-mortgages/central-bank-throws-families-to-the-wolves-42209683.html Central bank throws families to the wolves