Mortgage interest rates for mortgages owned by vulture funds and serviced by Pepper are expected to reach an average of 7%. Pepper has announced another increase in variable rates for the majority of the 21,000 residential variable-rate mortgages it handles.
Permanent TSB has also announced its fourth increase in mortgage rates since the European Central Bank (ECB) began raising rates in July of last year.
Previous rate hikes occurred in November, January, and March before the most recent one.
Specific new fixed-rate mortgages offered by Permanent TSB will see an increase of up to 0.50 percentage points. However, fixed rates for green mortgages, which are available to customers with an energy rating of B3 or higher, remain unchanged.
These rate hikes coincide with AIB’s announcement of a half-year profit of €854m, with higher interest rates being a major factor contributing to a 79% jump in profits.
The scandal of vulture funds treatment of mortgage holders
According to the banking group, net interest income surged to €1.77bn in the first half of 2023 compared to €895m during the same period last year. Net interest income represents the difference between the interest income earned on mortgages and loans, and the interest paid on deposits.
Finance Minister Michael McGrath has expressed concern about the impact of the “dramatic” increase in interest rates on mortgage holders and has called on banks to prevent them from falling into arrears. These statements were made after the European Central Bank raised rates by a quarter of a percent to 4.25%, as part of their ongoing efforts to combat inflation.
Michael Dowling, a broker from Dowling Financial, predicts that this latest increase will lead to an additional €90 per month in repayments for the average €300,000 mortgage over a 30-year term. He expresses disappointment with the lack of competition in the market and believes it is unfair to discriminate against those who are unable to qualify for a green mortgage.
Pepper has indicated that variable rates will increase by a range of 0.5 to 1.25 percentage points. These rate hikes are expected to push many borrowers into arrears, as they may already have repayment arrangements in place due to their inability to make full payments.
Pepper attributes these rate increases to recent announcements by the European Central Bank regarding rate hikes. The company states, “The rate increases will be passed on to the majority of the 21,
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