Pepper starts to cut variable rates after two ECB reductions

Pepper Advantage, the mortgage services provider used by a number of investment funds for Irish loans acquired after the financial crash, has started to cut variable rates months after the European Central Bank (ECB) had begun to lower official rates.
The company has begun notifying over 9,000 residential mortgage customers of decreases in their variable mortgage rates over the coming days – representing almost 53 per cent of its 17,000 variable-rate customers, it said in a statement on Tuesday.
Rate decreases will range from 0.25 of a percentage point to 1 point, and the majority of the customers receiving this initial reduction will receive decreases of between 0.35-0.5 of a point.
It will bring the average rate for such customers down from about 7 per cent currently. It is understood that it will reduce its highest rate, currently being charged on some 100 legacy sub-prime loans Pepper took over after the crash, to about 10 per cent.
“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,” the company said.
“Pepper 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 ECB cut its key deposit rate by a quarter of a point in June and, again, by the same amount in September. It is widely expected by economics and debt market investors to reduce its deposit rate, currently at 3.5 per cent, by a further quarter of a point on Thursday.
The central bank had hiked its benchmark rate from zero to a high of 4 per cent between July 2022 and September 2023 amid a fight against runaway inflation.