NoRegretsCoyote
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Road map for borrowers as Pepper forced to fix rate for 25 years
A court decision forcing a financial services company to halve the mortgage rate offered to a distressed borrower and to fix it for the likely duration of the loan offers thousands of people a “roadmap” towards a degree of financial security, campaigners have said......At a sitting of Tullamore Circuit Court last week, Judge Mary O’Malley Costello gave the green light to a Personal Insolvency Arrangement (PIA) for a couple with a home loan serviced by Pepper Finance. The deal saw a fixed rate of 2.5 per cent over 25 years applied to their mortgage of just under €290,000.
Pepper Finance had objected to the deal and had previously vetoed it, saying it could not “countenance” a fixed rate at that level for such a lengthy period.
To be quite honest I don't think this is a good thing. As I've argued before a lender charging rates of 8% is not at all fair on customers but forcing them to offer 2.5% fixed for 25 years is nor fair on the lender either. I can't see a scenario where this doesn't result in a large loss for them.
I really think the Oireachtas should be making the law systematically on this issue and not judges doing it on an ad hoc basis.
Edit: I should point out that this is in the context of a PIA so the lender would be expected to be taking a bath. I still think some fixed margin over a reference rate is a better way to do this than a pure fixed rate.
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