Customer Support FAQs
1. Interest Rate Increases:
How is Pepper responding to the latest ECB decision made on Thursday 16th March to raise interest rates by another 0.5%?
The further 0.5% ECB base rate increase announced by the ECB on the 16th of March 2023 will affect Tracker mortgage customers, where such increases are automatically passed on as part of their contract. It is likely that a further rate increase will be passed on to the majority of Variable Rate customers over the coming months. You will be notified in advance of any changes to your Variable Rate and what this change will mean for you
Why are ECB interest rates increasing and why is this impacting mortgage interest rates?
The European Central Bank (ECB) have (as of 22nd March 2023) now made six separate increases to the main ECB official lending rate, totalling a 3.5% increase since July 2022. The ECB has decided these rate increases are required to curb inflation across the Eurozone including Ireland.
These ECB rate increases have also pushed up the cost of short-term wholesale interest rates by over 3.0% in recent months and could potentially raise interest rates again at its next monetary policy meeting in May. Wholesale interest rates are used to fund many of the mortgage loans that Pepper services and are often referred to as the “cost of funds”. Both the increases in the ECB rates and the increased funding costs have regrettably necessitated the increase in rates on our customers Tracker and Variable Rate mortgages.
How are decisions made in relation to variable rate mortgage?
Pepper as legal title holder manages interest rate decisions on behalf of the beneficial owner of the loans in relation to changes to variable rate mortgages.
When making decisions on Variable Interest Rates, we consider a range of 6 factors as set out in our Variable Interest Rate Policy statement. Changes to any of these factors can result in changes to Variable Interest Rates.
These factors include the mortgage funding costs (“cost of funds”) for the beneficial owner driven by wholesale interest rates which have risen sharply over recent months as a result of the ECB and other Central Bank decisions on interest rates.
I am concerned that I won’t be able to make my mortgage repayments due to the increase in interest rates or the rising cost of living (or both); what are my options?
We have a highly experienced team who work with customers to find solutions if they can’t meet their repayments.
We offer one of the broadest ranges of temporary and longer-term forbearance solutions in the Irish market. These solutions may include fixed reduced monthly repayments, interest only repayments, loan term extensions, arrears capitalisations or interest rate discounts.
Whether you’re having difficulty meeting your financial obligations in response to interest rate increases or rising costs of living, please contact now sooner rather than later so that we can try to help. Pepper can offer a number of solutions tailored to your individual circumstances and affordability. These may include a term extension or an interest rate discount to effectively fix the monthly payments for a specified period of time.
I am concerned that I won’t be able to make the repayments in relation to the variable rate increases on my Split Mortgage?
If you have a Split mortgage and are at risk of financial difficulty from the rise in variable rates, Pepper can offer a number of solutions tailored to your individual circumstances and affordability which may include a term extension, an interest rate discount or to fix the monthly payments for a specified period of time.
Can I switch my mortgage to another lender?
Yes, and we actively work with customers wishing to switch their mortgage to another lender. We recommend you look at your mortgage options regularly because a different product from another lender may lead to savings for you. The Competition and Consumer Protection Commission’s website (www.ccpc.ie) provides information relating to switching lenders or changing mortgage type
Where switching mortgage provider is not possible for a customer who is looking for a lower interest rate to make their repayments more affordable - for example in cases where mortgages were previously restructured, currently in a restructure or because of issues affecting a credit record - we will work with customers to find a solution tailored to their needs, with the aim of helping them to resolve their current situation.
Are the interest rate increases consistent with the terms and conditions of my mortgage?
The level of interest rates charged on mortgage loans and the basis for the adjustment of the mortgage rate, are commercial decisions and must be made in line with the terms of the original or amended mortgage contract entered into by the customer and the original mortgage lender.
When loans are transferred to Pepper, we review the loan agreements and the related terms and conditions to ensure we fully understand our new customers contractual rights and the contractual obligations that Pepper must uphold, including the detailed provisions around interest rates.
Pepper will always respect a customer's existing loan terms and conditions without exception as required by law and regulations.
Does Pepper benefit from the interest rate increases?
Pepper does not receive any direct economic benefit from the increase in interest rates. The interest rate increases being passed on cover the rising cost of funds being incurred by the beneficial owner of the loans, who are currently facing higher funding costs for mortgages they own.
Has Pepper passed on more than the ECB Base rate increases to customers?
No. The increases to Variable Interest Rates applied to date are less than the rate increases announced by the ECB up to 16th March of 2023.
Will there be further increases on my Variable Rate Loan?
This can be difficult to determine ahead of time given the challenging economic conditions, however it is possible that there will be further increases to Variable Interest Rates following increases in the ECB base rate. We will contact impacted customers in advance to notify of any such further interest rate increases.
Who is the beneficial owner of my mortgage?
The beneficial owner purchased your mortgage as part of a Loan portfolio sale from your previous loan owner. Pepper as legal title holder, services your mortgage on behalf of the beneficial owner of your mortgage.
2. Variable Rate Mortgages
What is a Variable Interest Rate?
Variable Interest Rates are subject to change, meaning that the interest rate can go up or down subject to a variety of factors determined by your Lender. It isn’t specifically linked to the European Central Bank’s ECB base rate; however, Lenders often change Variable Interest Rates when the ECB rate goes up or down. This means that when the ECB base rate rises or falls Pepper may either raise or reduce your current interest rate accordingly.
Does Pepper have a Standard Variable Rate?
No, mortgages on various interest rate products including Variable Interest Rates transferred to Pepper as part of Loan portfolio sales from many different lenders in Ireland. These interest rate products were agreed by the original lender and vary by type and by lender.
I have a Variable Rate mortgage with Pepper, what does this interest rate change mean for my Loan?
If any changes are to be made to your Variable Interest Rate, Pepper will write to you in advance, providing 30 days’ notice of any interest rate change. Notification letters relating to interest rate changes will detail the reason for the change and the impact of the change on your Loan repayments.
I have a Price Promise product, will my rate/payments increase?
Price Promise is a variable rate mortgage, that will never be more than a margin (1.4%/1.50%) over the published ECB base rate. When changing variable interest rate products, Pepper will write to you in advance, providing 30 days’ notice of any interest rate change. Notifications relating to interest rate changes will detail the reason for the change and the impact of the change on your Loan repayments.
3. Tracker Rate Mortgages:
What is a Tracker Mortgage?
A tracker mortgage is a type of mortgage where the interest rate charged on the Loan tracks that of another publicly available rate, typically the interest rate set by the European Central Bank.
I have a tracker mortgage with Pepper, what do the recent European CB base rate changes mean for my tracker mortgage?
A tracker mortgage “tracks” the ECB base rate, which means the interest rate on your Loan moves in line with the ECB base rate. The ECB Interest rate increase announcements will result in an increase to your interest rate.
When will the rate changes announced by the ECB take effect on my Loan account?
Pepper will write to all customers impacted to provide them with information on ECB base rate increases and what they will mean for them. For more information on the ECB base rate increase please refer to https://www.ecb.europa.eu/
How much will my repayments increase by?
Pepper will write to all customers impacted, these interest rate change notification letters will include the effect of the latest ECB base rate increase on your interest rate and when the increase will take effect on your account. You will receive further correspondence from Pepper when the interest rate increase is applied to your account notifying you of the effect of the interest rate increase on your monthly Loan repayments and when they will change.
For guidance, please see below table outlining the indicative increase on a per €50,000 borrowed based on the latest ECB base rate increase of 0.5%.
| Outstanding Balance | Monthly NMI Increase* |
| €50,000.00 | €20.55 |
| €150,00.00 | €61.64 |
| €250,000.00 | €102.74 |
| €300,000.00 | €123.29 |
| €350,000.00 | €143.84 |
*Note: These amounts are for indicative purposes only, interest rate change notification letters will issue to all customers impacted with information on the actual new monthly Loan repayment amounts and when they will take effect.
What dates did the ECB rates increase, what is the effective date, and what was the % rate increase?
|
ECB Announcement |
Rate Change |
ECB Effective Date |
ECB Base Rate |
|
21-Jul-2022 |
0.50% |
27-Jul-2022 |
0.50% |
|
08-Sep-2022 |
0.75% |
14-Sep-2022 |
1.25% |
|
27-Oct-2022 |
0.75% |
02-Nov-2022 |
2.00% |
|
15-Dec-2022 |
0.50% |
21-Dec-2022 |
2.50% |
|
02- Feb-2023 |
0.50% |
08-Feb-2023 |
3.00% |
|
16-Mar-2023 |
0.50% |
22-Mar-2023 |
3.50% |
Further information is available at the below ECB link: https://www.ecb.europa.eu/press/govcdec/mopo/html/index.en.html
4. Alternative Repayment Arrangements:
I have an agreed Alternative Repayment Arrangement (ARA) with Pepper, how does this rate increase affect the arrangement?
The terms of any agreed alternative repayment arrangement (ARA) will remain in effect however the interest rate on your Loan may increase in line with the ECB base rate / Variable Interest Rate changes. If you are making reduced payments as part of the ARA, your Loan repayments will remain the same until the end of the reduced payment period (at which time the new repayment amount will be notified to you at least 30 days before the ARA ends). If you are not making reduced payments, your Loan repayment will change following the interest rate increase. It is important that you contact us if you have any concerns in relation to your ability to make the increased Loan repayments as we are there to support our customers.
I have an agreed Personal Insolvency Arrangement with Pepper; how does this rate increase affect the arrangement?
If you are currently in a Personal Insolvency Arrangement (PIA), your expected payment as per the agreed arrangement will remain unchanged. However, this interest rate change will be applied to your loan account and in the event your PIA comes to an end or is terminated, your Loan repayment amount will be adjusted accordingly. We will contact you in advance of the arrangement coming to an end to inform you of any revised Loan repayment amount that will come into effect after the PIA ends. It is important that you contact us if you have any concerns in relation to your ability to make the increased Loan repayments as we are there to support our customers.
I have a Split Mortgage; how does this rate increase affect the arrangement?
Split Mortgages are a restructure of the mortgage where a portion of the Loan is moved to a warehoused Loan typically accruing zero interest and the remaining balance continues to accrue interest based on the terms of the Split Mortgage. If the interest rate on the remaining balance of your Split Mortgage is variable, any changes to the Variable Interest Rate will be notified to you in advance, providing 30 days’ notice of any interest rate change. Notification letters relating to interest rate changes will detail the reason for the change and the impact of the change on your Loan repayments.
5. Fixed Rate Mortgages:
I am currently on a fixed rate which will move to an interest rate tracking ECB at the end of the fixed rate period, what does the recent rate changes mean for me?
The rate increases will not impact your Loan while you are in a fixed rate, when your fixed rate expires your interest rate will move onto the prevailing ECB interest rate. You will receive advance notification before your fixed rate is due to expire to advise you of what the new rate will be and the impact of the change on your Loan and your monthly repayment.
I am currently on a fixed rate which will move to a Variable Interest Rate at the end of the fixed rate period, what does the recent rate changes mean for me?
The rate increase will not impact your Loan while you are in a fixed rate, when your fixed rate expires your interest rate will move onto a Variable Interest Rate. You will receive advance notification before your fixed rate is due to expire to advise you of what the new rate will be and the impact of the change on your Loan and your monthly repayment.
6. General Queries:
How can I find out how much my new repayment will be after the rate on my account increases?
You will receive correspondence from Pepper when the interest rate increase is applied to your account. This letter will notify you of the new monthly repayment amount, after the interest rate increase is implemented along with the date that the new repayment will take effect from.
Do I need to change my direct debit payment for the increased monthly payment?
No, if you pay your Loan by direct debit, the new Loan repayment amount will be automatically taken when your Loan repayment changes.
Do I need to take any action if my loan is expired, and I continue to make payments by Direct Debit to the Loan?
If your loan is expired i.e., the full balance is due at this time and you continue to make payments by Direct Debit, you should contact Pepper to make the necessary arrangements to amend your Direct Debit amount to include the increased interest charged as a result of the interest rate increases.
I currently make overpayments to my Loan by a fixed Direct Debit amount, what do I need to do?
Your existing overpayment will remain unchanged, however, if you wish to make further additional payments or if the increase will be more than the existing overpayment amount, you should contact us on the contact details provided and we will arrange for the overpayment amount to be changed.
I pay by standing order/ cheque, Bank Transfer, Debit Card what do I need to do?
You will need to make the necessary arrangements to amend your payment amount when you receive the payment change notification letter.
My Loan is repaid in full, and I have received a letter notifying me of an interest rate increase.
If you have repaid your Loan in full, you should disregard this letter as the ECB interest rate change will not Impact your Loan.
Contact Pepper, we are there to help:
If you have any further queries on your Residential Mortgage, please contact Pepper Customer Support on the contact details provided below (where possible, please quote Loan reference number):
Customer Support helpline: 0818 828 828
Pepper Asset Servicing, PO BOX 4310, Shannon, Co. Clare
If you have any further queries on your Commercial Loan, please contact Pepper Customer Support on the contact details provided below (where possible, please quote Loan reference number):
Interest rate queries helpline: 0818 828 728
CRE Primary Servicing, PO BOX 697, Shannon, Co. Clare