Pepper Advantage Ireland, the mortgage services provider, said more than 13 per cent of loans it manages on behalf of nonbanks that are not active lenders have been refinanced since the start of 2024.
The firm, which is used by a number of investment funds to manage loans acquired after the financial crash, said this has been done either by borrowers switching to another lender or selling their home, often to buy another one funded by a mortgage elsewhere.
While Pepper managed about 100,000 loans at the start of 2024, only 53,000 of these were serviced on behalf of nonbank nonlenders. More than 7,000 (13 per cent) of the loans in this category have been redeemed in the past 19 months.
“It’s not as widely known as we would like, but we have helped a steady stream of customers redeem their mortgages over the years,” said Niall Sorohan, chief executive of Pepper Advantage Ireland. “We’re excited to see new lenders entering the market and hope increased competition leads to even more choice.”
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Mr Sorohan said Pepper has seen some customers use savings and investments to pay off their mortgages as the European Central Bank hiked the main lending rate from zero to 4.5 per cent in 2022-2023. It has subsequently fallen back to 2.15 per cent.
However, many customers of nonbank lenders managed by Pepper have been trapped and unable to refinance elsewhere due to their poor repayment track records. The firm has been in the headlines in recent years for charging some of the highest mortgage rates as official borrowing costs spiked. Some loans carried variable rates of 10 per cent, even if the average lay at 6-7 per cent. It has reduced rates since the ECB started cutting official rates.
As part of its Dealing with Debt campaign, the Banking and Payments Federation of Ireland (BPFI) launched an initiative in 2023 to allow struggling mortgage holders to move their loan from credit servicing firms to mainstream banks to escape higher interest charges.
However, criteria include that customers must be repaying capital and interest on the full outstanding mortgage and their Central Credit Register (CCR) must show a clean repayment track record without arrears for at least the past two years.
Earlier this year a new nonbank lender, Núa Money, launched a product specifically aimed at what it calls “mortgage prisoners” indebted to investment funds, which are known colloquially as vulture funds. Its Núa Freedom product is aimed at borrowers who were previously in trouble but have maintained a restructuring arrangement for at least five years.
