Pepper hikes some Irish mortgage rates to 6.5%

Firm is latest to increase interest rates

Pepper Finance, the mortgage services provider used by a number of investment funds for Irish loans acquired after the financial crash, has moved to pass on the full extent of recent European Central Bank (ECB) rate hikes to thousands of standard variable rate customers.

The move will lift the standard variable rates (SVR) on some loans to 6.5 per cent – which is well in excess of SVRs on offer from firms still actively offering new loans in the market, which range from 2.95 per cent to 5.25 per cent.

Pepper, which services about 80,000 Irish mortgages owned by investment funds such as Carval, Goldman Sachs and Pimco, announced in September that it was hiking that rate on thousands of SVR mortgages by 1.25 per cent, in line with the effect of two ECB official rate hikes.

This was reported to have moved the average SVR on loans managed by Pepper to close to 5.45 per cent.


Pepper moved last week to give thousands of borrowers 30 days’ notice that the ECB’s 0.75 of a percentage point rate increase in late October will now be passed on to them.

Spokesman for Pepper declined to comment on how many people are affected, but said that they will have received a letter by now.

Aside from the cost of tracker loans rising automatically with ECB rate hikes, all six continuing mortgage lenders in the market have raised rates on certain products, mainly affecting new fixed rates.

While AIB added 0.5 of a percentage point across the board to new fixed rates in September, Finance Ireland has increased its variable and fixed rates by 1.5 to 2 points and suspended offering long-term fixed products of 10 years or more. Non-bank lenders have been particularly affected by a spike in market interest rates, whereas Irish banks mainly fund their mortgages from deposits, which continue to earn little or nothing for savers.

Brendan Burgess, a consumer advocate and founder of, said that many borrowers affected by the latest Pepper rate increase, including some former Permanent TSB and Danske Bank customers, cannot refinance at lower rates with mainstream lenders because they are considered higher risk borrowers.

He said that funds that own portfolios of loans are not subject to the same competitive “market forces” as continuing banks in determining rates.

“A lot of borrowers affected by the Pepper increases are now going to find themselves falling into arrears,” he said.

The Pepper spokesman said: “With the rising cost of living and rising interest rates, we are acutely conscious that this is a challenging time for many people. We would encourage Pepper customers who are worried about their financial situation or experiencing financial difficulties to please contact us ... we will have a broad range of solutions available to help people manage their situation.”

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times