ULSTER BANK HAS agreed terms for the sale of an €800 million mortgage portfolio to Pepper Finance Corporation (Ireland) DAC.

The loan portfolio contains 3,175 non-performing mortgages, the majority of which are private dwelling homes (PDH).

The bank said the decision to sell the portfolio was “difficult” and had been taken after a period of “concentrated engagement with customers”.

“Our preference is to work with customers to find a solution that keeps them in their home while paying a mortgage that is affordable for them in the long-term. This is not possible for every customer,” it said in a statement today.

This deal is being financed by funds managed by CarVal Investors. 

The average level of arrears for the 2,800 private dwelling homes is €36,000, with an average of 28 missed payments. Among this group, 40% have been in current arrears for over seven years. 

There are 375 buy-to-let loans included in the portfolio and 90% have been in arrears for more than a year during their lifetime. The average level of arrears for these loans is €31,000, with an average of 17 missed payments. 

Ulster Bank said none of the included home loans are in alternative repayment arrangements, though there are a small number that are in personal insolvency arrangements.  

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“For mortgages that are not sustainable, additional forbearance will not bring them back to a performing position and we are obliged to reduce the level of non-performing loans on our balance sheet,” the bank said. 

We take this step only as a last resort following an extensive campaign to find sustainable solutions for our customers. In fact, the portfolio has reduced since it was announced due to more customers entering a sustainable arrangement.

Ulster bank said it will be in contact with affected customers “at the appropriate time” to assist them as their loans transition to the new owner.