Pepper increases SVR for some customers

Pepper Advantage, which services their mortgage on behalf of an unnamed vulture fund that owns it, wrote to the couple this week telling them their mortgage rate would go up by 0.95 of a percentage point from December.

Their variable interest rate will go from 6.5pc at the moment to 7.45pc next month. This means the annual repayments will rise by around €1,200.

The couple, who do not want to be named, are among 450 mortgage account holders with Pepper Advantage who have been told their repayments are rising next month.

Pepper Advantage cited “market conditions” in the letter sent to the couple explaining why their repayments were rising.
...
Mortgage adviser Padraic Kissane said it made no sense to cite market conditions for the rate rise when the European Central Bank had already cut rates three times this year and was expected to reduce them again in December.

Brendan Burgess said:

Pepper Advantage, which services their mortgage on behalf of an unnamed vulture fund that owns it, wrote to the couple this week telling them their mortgage rate would go up by 0.95 of a percentage point from December.

Click to expand...

That's almost the same amount as all ECB rate cuts so far this year (1.1%)!

Recouping all the income they have lost on the trackers they have on their books, I would suspect.

callybags said:

Recouping all the income they have lost on the trackers they have on their books, I would suspect.

Click to expand...

If they are not leveraged like the vast majority of funds what Income would they have lost ?

Admittedly it makes little difference to the borrowers involved, but according to this it may not actually be Pepper who decides on such rate increases...

The latest sale is not expected to have any impact for Irish customers. Many of the loans and mortgages managed by the business here are owned by other fund managers and investors. Its servicing role means Pepper Advantage deals with customers in relation to day to day management of loans and engages in debt restructuring discussions but issues such as mortgage interest rates may ultimately be decided by the funds that own a particular loan.

Click to expand...

Heres a Judgement from ECJ relating to a Spanish variable Rate. The Rate is derived from what looks like an Interbank Rate but the Reference Index is published. They deemed it to be ok because significantly its transparent how its calculated.

In Ireland the Variable rate (unless a tracker or Fixed) is entirely at mercy of Lender. In this case they justify an increase based on market conditions but as we all know rates have decreased of late therefore an average consumer is really in the dark. Its also likely the Portfolio buying the Loan book is not leveraged but we cant be sure because they are not transparent in relation to it.


If anyone ever suceeds getting a case referred to ECJ I think most Irish Institutions could face significant difficulties especially any vulture fund