SOME 27,000 MORTGAGE holders who currently have their mortgages held by vulture funds are eligible to switch to high street lenders under existing criteria, according to the Finance Minister.

Speaking in the Dáil this morning, Finance Minister Michael McGrath said that this figure from the Central Bank represents about a quarter of the mortgages held by non-bank entities in Ireland.

Up until now, the Minister said we have had “very low levels” of switching from the non-bank to the bank sector because of a lack of eligibility criteria and because “the appetite to receive such customers was limited”.

Last month, the Finance Minister met with representatives of the banking and mortgage sector to discuss what they can do to help customers feeling the impact of rising interest rates. 

Since then, banks have published what the minister described as a “significant set of measures” which details an agreed set of industry wide switching criteria available to customers to facilitate them switching from non-banks (including vulture funds) to high street lenders.

One measure is that mortgage holders who are currently with a non-bank lender, some of whom are paying up to 10% interest rate on their mortgage, are now permitted to switch to one of the pillar banks, if eligible. 

But Sinn Féin’s finance spokesperson Pearse Doherty told the Minister today that he has “serious reservations” about the measures that were announced.

Doherty said the switching criteria is too restrictive.

“They require households to be paying capital and interest in full on the outstanding mortgage with no split or warehoused element on the mortgage. They expect you to have your household’s credit history to show a clean repayment track record without arrears for at least the past two years,” Doherty said.

“We know that there’s 80,000 households that have mortgage loans held by vulture funds, and they have little option to switch.

“They’ve received letter after letter in the post confirming other interest rate hikes adding hundreds if not thousands of euros to their mortgage repayment and some of them are paying as much as 10% interest rate.”

In response the Minister said the agreed criteria is a “very significant start” and that we need to see the level of switching from non-banks to banks increase significantly. 

He said that he will be monitoring the implementation of the eligibility criteria “very, very closely”.

He added: “As indeed I will be monitoring the implementation of the key player in the non-bank sector, Pepper [Finance].”

Pepper Finance also recently announced that it would be offering its customers who are in distress an alternative repayment arrangement that involved a temporary fixed rate of 3%. 

The Minister said today that he would also be “watching very carefully” how many customers are actually in a position to access that rate. 

The Journal reported recently that the Finance Minister has been working on budget ideas to help mortgage holders, particularly those trapped paying high interest rates to overseas funds.

It is understood that McGrath has been working with Social Protection Minister Heather Humphreys on possible measures, which could include targeted measures that are limited to borrowers who tried to switch mortgage providers and have been refused.

Last month, Taoiseach Leo Varadkar seemed to indicate that there would be some form of targeted mortgage interst relief in the budget.