The credit servicer plans to increase variable rates for the majority of the 21,000 residential variable rate mortgages it manages.
The increase in rates for these borrowers comes after a previous hike in European interest rates earlier this summer.
Moreover, the recent rate increases by the European Central Bank are not being factored into the latest rise in variable rates for Pepper’s borrowers, potentially resulting in further increases for them.
Pepper has confirmed that the latest rate increases will range from 0.5 to 1.25 percentage points.
The scandal of how vulture funds treat mortgage holders.
There are concerns that these substantial rate increases will push many borrowers into arrears.
Furthermore, many of these mortgage holders already have repayment arrangements, such as split mortgages, due to their inability to make full payments.
According to Pepper, these rate increases are a result of recent rate increases announced by the European Central Bank.
In a statement, Pepper said, “The rate increases will be applied to the majority of the 21,000 residential variable rate mortgages we service.“
The average variable rate for Pepper’s residential customers is 6.3%, with some loans having higher or lower rates.
This latest increase is a response to the June ECB rate rise and does not take into account the recent ninth Eurozone rate increase.
The Irish Independent reported earlier this week that arrears have significantly increased in a portfolio of Irish mortgages, worth half a billion euros, which was sold to an unnamed vulture fund and managed by Pepper.
Experts warn that this development may indicate the increasing pressure faced by borrowers whose mortgages have been sold to vulture funds.
Kroll Bond Rating Agency Europe, a credit rating agency, noted that arrears in the Jamestown Residential mortgage portfolio have risen from 27% last year to 40%.
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