The credit servicer will increase variable rates for the majority of 21,000 residential variable rate mortgages it services.
The hit for the trapped borrowers follows a hike in European interest rates earlier in the summer.
The latest rise in variables for those trapped with Pepper does not take account of this week’s European Central Bank rate rise which could see variables for those with Pepper going up again.
Pepper said the latest increases range from 0.5 percentage points to 1.25 points.
The scandal of vulture funds treatment of mortgage holders
There are fears that such huge increasers will force many of the borrowers into arrears.
Many of the mortgage holders will already have repayment arrangements in place, such as split mortgages, as they are unable to make full payments.
Pepper said the rate rises come about due to a number of recent rate increases announced by the European Central Bank.
It said in a statement: “The rate increases will be passed on to the majority of the 21,000 residential variable rate mortgages serviced by Pepper.”
It said the average variable rate for residential customers serviced by Pepper is 6.3pc, but said some loans will have a higher rate and some loans will have a lower rate.
This latest increase is in response to June ECB rate rise, and does not take account of this week’s ninth Eurozone rate increase.
Earlier this week the ‘Irish Independent’ reported that arrears have surged in a portfolio of Irish mortgages worth half a billion euro that was sold to an unnamed vulture fund and managed by Pepper.
Experts said the development could indicate the more widespread pressures building on borrowers whose mortgages have been sold to vulture funds.
Credit rating agency Kroll Bond Rating Agency Europe said in a note to investors that arrears had spiked from 27pc last year to 40pc in what is called the Jamestown Residential mortgage portfolio.
The mortgages were originated by Bank of Scotland (Ireland), Nua Homeloans and Start Mortgages.
People whose mortgages were sold to vultures and serviced by the likes of Pepper are regarded as mortgage prisoners.
This is because they cannot switch lender due to missed payments in the past or because they had the payments schedule restructured.
And funds do not offer fixed rates, leaving mortgage holders exposed to the repaid rise in wholesale interest rates.
There has been criticism of funds and their credit servicers pushing through ECB rate rises.
This is because the portfolio of loans managed by the likes of Pepper were bought for a fraction of the book value of the mortgages.
However, Pepper insisted that not all ECB rate rises are being passed on to all variable mortgages it handles.
Pepper said that for those customers most impacted by rising interest rates and the rising cost of living it has a broad range of solutions available.
“We will work with customers to put a solution in place that addresses their unique and individual circumstances and affordability,” it said.
Customers can contact Pepper on 0818 828 828, it said.
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