FINANCE MINISTER MICHAEL McGrath has welcomed a ruling in which Pepper Finance was forced to give a lower mortgage rate to a borrower.
He says he hopes that fixed rates are offered more going forward, as many borrowers’ mortgages have been sold to vulture funds and managed by credit servicer firms.
Tullamore Circuit Court ordered mortgage provider Pepper to give a cheap long-term rate to a couple seeking a personal insolvency arrangement.
The borrowers will now pay a rate of 2.5% over the next 25 years.
“I welcome the judgement. I believe that loan owners and mortgage providers should be offering fixed rate options to their borrowers,” McGrath told RTÉ Drivetime.
“This is an issue I’ve raised directly with them, and also with the central bank.
“At present, under the code of conduct on mortgage arrears, the lenders are only required to consider the alternative payment arrangements from the suite of options they offer.
“They’re not required to consider all of the possible options.”
Pepper is a leading mortgage provider that acts on behalf of a vulture fund.
It has not previously offered fixed rates as solutions to customers.
According to figures from the Central Bank, there has been spike in the cost of new mortgages, with the average interest rate up to over 3.5% in March from under 3% in February.
McGrath said: “I do think for some customers that certainty of knowing how much they will have to pay over the years ahead is very valuable.”
The ruling shows that the solvency process “can lead to improved outcomes for borrowers,” he said.
“Hopefully we will see more such outcomes into the future.”
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