Some mortgage holders, whose loans are managed by Pepper on behalf of vulture funds they bought after the financial crash, have been told their interest rates are set to rise to as much as 6.5 percent.
Onsumer advocate Brendan Burgess said people whose loans have been sold by the main banks are now “mortgage prisoners” because they can’t set lower interest rates.
He said the central bank is not doing enough to protect homeowners whose mortgages have been sold to vulture funds by the big banks.
“They are mortgage prisoners. They could have settled at 3 percent if their mortgages hadn’t been sold, but now they’re paying up to 6.5 percent,” he said.
One borrower explained how its variable interest rate went from 4.5 percent to 6.5 percent, adding €210 to monthly costs.
This adds $2,500 to Pepper’s annual cost of paying off his mortgage.
Mr Burgess accused the central bank of forcing the loans to be sold and claimed the regulator had not done enough to protect these mortgage holders.
People whose loans have been sold and are being serviced by Peppers are now paying some of the highest variable mortgage rates in the state.
Some of those affected by huge increases in their mortgage rates from credit service companies are moving away from so-called alternative repayment arrangements that were put in place because they were unable to make the full repayments.
Mr Burgess said if the central bank hadn’t forced banks to sell mortgages, customers could have locked interest rates at 3 per cent at companies like Permanent TSB, one of the loan sellers.
“When they asked Pepper about the fixed price, they were told they didn’t offer fixed prices.”
He added: “The Treasury Secretary kept saying when selling the loans that customers’ rights were protected, but they were not protected from double the interest they would have paid had they stayed with Permanent TSB.”
He said there was also a subgroup that managed LTV mortgages. These people paid a lower variable interest rate as their home appreciated relative to the mortgage they owed.
But Mr Burgess said they lost that option.
“The central bank should investigate this as it has the makings of another tracker scandal. A lot of those customers should have that rate and Pepper shouldn’t have increased the rate.”
The central bank said it could not comment on its regulatory engagement with any individual company.
It expects all regulated entities to take a consumer-centric approach to all decisions affecting their customers.
And it said it had recently written to CFOs to remind them to treat consumers sympathetically amid rising interest rates and a raging livelihood crisis.
Pepper said that with the cost of living rising and interest rates rising, it was well aware that this would be a challenging time for many people.
“We encourage Pepper customers who are concerned about their financial situation or are experiencing financial difficulties to contact us.
“Our highly experienced team will be available to assist and we will have a wide range of solutions available to help people deal with their situation.”
It said rate hikes at the ECB level would be passed on to certain residential, rental and SMB customers for Standard Adjustable Rate Mortgage serviced by Pepper where Pepper had legal title to the mortgage.
However, this time fewer customers were affected by price increases than in September.
https://www.independent.ie/business/personal-finance/mortgage-prisoners-hit-with-interest-rates-of-up-to-65pc-42165087.html “Mortgage prisoners” hit with interest rates of up to 6.5 percent