Credit servicing firm Pepper Finance is to increase interest rates on the majority of its variable mortgages by 1%.
The company said the move was in response to the increases in interest rates announced by the European Central Bank in both December and earlier this month.
But it added that the latest increase continues to be less than or equivalent to the increase in ECB interest rates announced to date.
It also claimed that it does not receive any commercial benefit from the increase.
"The five consecutive ECB interest rate rises, totalling 3% since July 2022, have regrettably necessitated these increases being passed on to the majority of the 21,000 residential variable rate mortgages, serviced by Pepper on behalf of its clients," it said in a statement.
The increase will add to the company's current average variable rate of 5.2% across its loans and its average split mortgage rate of 3.1%.
Some borrowers pay less though and others, whose loans had higher rates when they were transferred to Pepper as a result of historic credit issues, pay more.
Because Pepper has hundreds of rates on thousands of loans, the new average after the increases have applied will not be clear until all the increases have taken place.
However, some of the variable rates charged by funds and credit servicing firms have been criticised recently.
That is because certain borrowers who had previously experienced difficulties in making mortgage repayments to banks and had their loans sold to such companies are now stuck paying very high variable mortgage repayments, in some cases around 7%.
This is because their credit history means they cannot move their mortgages elsewhere and most credit servicing firms do not offer new fixed rates.
It is estimated that roughly 113,000 borrowers who experienced difficulties making repayments have had their loans sold by banks to funds and credit servicing firms and of these around a third are on variable rates.
The Governor of the Central Bank has said that banks and financial institutions need to be proactive in supporting their customers as interest rates go up.
He told the Joint Oireachtas Committee on Finance, Public Expenditure & Reform and Taoiseach that the bank does not have a role in approving rates charged by lenders but it does expect financial firms to have arrangements in place to deal with customers in or facing arrears.
In it is statement today, Pepper said hundreds of its customers have chosen to redeem their loans early or switch to a different lender.
"The team at Pepper will continue to support those customers looking to switch or refinance their home loan to a bank or alternative lender," it said.
It said it recognises that for split mortgage customers, finding a new lender and switching may be more challenging, but it will "always support customers looking to switch to another lender".
"Where customers with split mortgages have concerns on their ability to continue making repayments on the main balance due to rising interest rates, we would ask them to contact us," it stated.
It added that since the beginning of the year around 5,000 customers have called its dedicated helpline to seek information and support.
