Pepper to write to 9,000 mortgage holders telling them it is cutting rates

Thousands of mortgage prisoners are trapped with vulture funds and are paying some of the highest interest rates in the market.

Some of these mortgage prisoners are paying rates of up to 9pc and 10pc.

Pepper Advantage said in a statement it is to begin notifying over 9,000 residential mortgage customers of decreases in their variable mortgage rates over the coming days.

The decision to lower rates for certain customers follows rate reductions by the European Central Bank (ECB) and is based on the criteria set out in Pepper’s variable interest rate policy.

The ECB cut its rates in June and September and is expected to announce another reduction this Thursday.

Today’s News in 90 seconds – 15th October 2024

Pepper said rate decreases will range from 0.25 percentage points to 1 percentage point.

The majority of the customers receiving this initial reduction will benefit from decreases of between 0.35 points and 0.5 points.

The current reductions apply to those Pepper Advantage customers who have seen the highest increases to date since the ECB incrementally started increasing rates in July 2022.

Pepper said it continues to review the situation for remaining customers and “subject to further ECB rate reductions, expects to be in a position to notify more customers of reductions in their variable rates in due course”.

The homeowners are known as mortgage prisoners as they are unable to switch lender due to missing payments in the past.

Meanwhile, independent economist Simon Barry said the ECB is poised to deliver its first back-to-back rate cuts in 13 years.

The last time it did so was in late 2011 during the sovereign debt crisis, he said.

“While no such existential crisis is in play this time, the latest signals on economic growth and inflation mean that we are likely to hear ECB President Christine Lagarde couch the decision in terms of a strengthening of policy maker confidence that inflation is going to durably get back to and stay in line with the 2pc target in a manner that is both timely and sustainable,” Mr Barry said.

He said money markets were anticipating another 0.25 point cut in December and a further 1 point of easing over the course of next year.

This means there will also be keen interest in the extent to which Ms Lagarde offers guidance on ECB policy intentions over the months and quarters ahead.