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Mortgages
Minister calls on Pepper to be 'absolutely clear' with customers about new fixed mortgage interest rate
Mortgage holders with non-banks and vulture funds can now switch to one of the pillar banks, says Minister McGrath.
FINANCE MINISTER MICHAEL McGrath has called on non-bank entity bank Pepper to state clearly what its new mortgage interest rate is for customers in difficulty.
Speaking at the Fianna Fáil think-in this morning, the minister also said he wanted the public to be informed that if their loan is with a non-bank or vulture fund, there is now an option to switch mortgage providers to one of the pillar banks.
Pepper Advantage in Ireland announced the roll out of its new interest rate for those struggling with their mortgage repayments last week.
The majority of customers whose mortgage is not with one of the pillar banks is held with Pepper.
“They came out in recent days with a statement which I welcome confirming the introduction of a new temporary fixed rate as an alternative repayment arrangement.
“So this is for somebody who is struggling with their mortgage with Pepper. I welcome the fact that there is a new, temporary fixed rate for a period of two years, but I would call on them to clarify what that rate is and to set out the circumstances that apply to people who may qualify for that rate,” he said.
McGrath said he knows what the temporary rate is (it is understood it stands at 3%) but the minister said it was not stated clearly in the press statement by Pepper last week.
“We call on them to be absolutely clear with their customers as to what that rate is. It’s not a rate that people can apply for, but people who are in distress who fill out the standard financial statements will now be considered for what is an attractive, temporary fixed rate, which will help people to get through what’s a very difficult period in terms of the level of interest rates currently being charged,” he said.
Meeting with the banks
McGrath recently met with representatives of the banking and mortgage sector, including the CEOs and senior representatives of the retail banks, retail credit firms and credit servicing firms to discuss the measures they can take to assist customers at this time of rising interest rates.
The minister said the increase in mortgage interest rates “are having a very direct impact on hundreds of mortgage owners across Ireland”.
He said the meeting he held with banks and non-banks was “very good” and “very frank”
“My overarching point was that people who are making a genuine effort to pay their mortgage who are paying what they can shouldn’t be allowed to fall into arrears because of changes in interest rates,” he said.
Since that meeting, banks published what the minister described as a “significant set of measures”.
One measure is that mortgage holders who are currently with a non-bank lender, some of whom are paying up to 9% interest rate on their mortgage, are now permitted to switch to one of the pillar banks, if eligible.
“For the first time now we have an agreed set of eligibility criteria to facilitate people switching their mortgage from a non-bank to a bank. So all of the banks and some other lenders like Avant Money, ICS and Finance Ireland have signed on to that set of criteria,” said McGrath, calling it a “important breakthrough”.
“It’s important we send out that message to those whose mortgage is with the non-bank sector and feel that they are a good candidate to have their mortgage switched,” said the minister.
