Credit servicing firm Pepper Advantage is to further increase the interest rates it charges on some variable mortgages that it manages.
The increases range from 0.5% to 1.25%, the company said, and will be passed on to the bulk of the 21,000 customers who have variable rate mortgages serviced by Pepper.
Currently these borrowers have an average rate of 6.3%, but this does not take account of the latest increases announced today.
The company said the changes arise from the recent increase announced by the European Central Bank, which raised rates by another 0.25% yesterday.
However, it is understood that today's announcement by Pepper does not include yesterday's hike and will only bring some variable rate customers up to date on the June ECB increase.
Some customers have also not seen all the ECB increases up to June or July applied, but this situation is being kept under review.
Customers who are to be impacted by the changes are to be contacted by Pepper from today.
Pepper said it has a broad range of solutions available for customers who are most impacted by rising interest rates and the cost of living.
"We will work with customers to put a solution in place that addresses their unique and individual circumstances and affordability," it said in a statement.
"Over the past five months, Pepper has proactively written to thousands of residential mortgage customers with accounts on higher rates and this customer outreach campaign is ongoing," it stated.
"We would encourage any of our customers who find themselves with affordability issues to engage with our team and send us a Standard Financial Statement (SFS) for assessment and our team will explore potential options and solutions for their individual circumstances," it added.
Currently residential owner-occupier variable rate mortgages serviced by Pepper represent just 2.9% of the total mortgage market here.
Among them are a cohort of mortgage holders, whose non-performing loans were sold by banks to investment funds and are managed by credit servicing firms including Pepper, who cannot move to a different lender due to their poor credit history.
As a result, they are stuck paying rising variable interest rates as credit servicers do not typically offer fixed rate mortgages.
It is estimated that over 100,000 borrowers are in such a situation, although only a portion are serviced by Pepper.
Pepper said it has supported hundreds of customers switching to another lender since interest rates started to rise and will continue to do so.
