Family will save €18,000 a year after new lender Núa Money takes on their mortgage

Interest rate on loan that was owned by vulture fund more than halved from 10.4pc to 4.85pc

New mortgage provider Núa Money has started to offer an escape for homeowners trapped with vulture funds and paying the highest lending rates on the market.

Núa is a mortgages start-up backed by the Allen beef barons of Wexford.

It secured a licence from the Central Bank earlier this year and started offering mortgages through brokers in July.

It has just taken on the mortgage of a family who were paying a rate of 10.4pc as their home loan was owned by a vulture fund.

These funds, which use credit services such as Pepper and Mars Capital, do not offer fixed rates. Instead, they have pushed up some of their rates multiple times in the last two years in response to European Central Bank (ECB) increases.

Núa Money has approved the family for a mortgage with a rate of 4.85pc. Their repayments went from around €3,500 to €2,000 a month – a saving of €18,000 a year.

“Previously, they thought they were mortgage prisoners,” Núa’s chief commercial officer Fergal O’Leary said. “Halving the interest rate results in a saving of circa €1,500 per month for the delighted borrowers.”

Mr O’Leary said Núa cannot offer such savings to all borrowers, but it is happy to accept applications from those who have a clean credit history for at least two years.

He said Núa looks at mortgage lending differently and takes a contrasting approach to underwriting compared with existing lenders.

Núa Money, which operates through brokers, is not directly funded by deposits, unlike the majority of Irish mortgage lenders, so its rates tend to be higher than some if its competitors.

Credit union Core said it was willing to take on the mortgages of some who are prisoners of vulture funds

Thousands of borrowers whose loans were sold by the mainstream banks are paying the highest rates of interest in the market. They are not given the option of locking into fixed rates and some are unable to switch as they have impaired credit histories.

However, regulators and lenders recently agreed to consider switcher applications from mortgage prisoners who have met their repayments for the last two years.

Close to 60,000 people are mortgage prisoners of the vultures, unable to move to other lenders as they may have been in arrears in the past.

This month, Pepper, which services thousands of mortgages owned by vulture funds, said it would reduce variable rates for around 10,000 of its customers. A small number of those whose mortgages are with Pepper are paying as much as 10.5pc. Others pay about 7pc.

“Pepper Advantage is currently looking at a reduction in vari­able interest rates, particularly for the variable-rate customers that have seen the highest increases to date,” it said.

“The company expects to be able to notify those customers over the coming weeks of reductions, subject to the criteria set out in our variable interest rate policy and decisions by the ECB.”

Leading Dublin credit union Core recently said it was willing to take on the mortgages of some of those who are prisoners of vulture funds.

Core Credit Union is targeting people who are trapped as they cannot access fixed mortgage rates.

Chief executive Michael Byrne said the switcher product for vulture prisoners was not the most competitively priced on the market, but it has some key features that will be unmatched.

Source: Charlie Weston, Irish Independent 3/10/24