Q&A: Why is the Tullamore court mortgage ruling so significant? 

Finance Minister Michael McGrath said it was a welcome decision: "I believe that loan owners and mortgage providers should be offering fixed-rate options to their borrowers. This is an issue I’ve raised directly with them and also with the Central Bank.' Picture: Sasko Lazarov/RollingNews.ie

A Tullamore Circuit Court decision could have profound effects for thousands of so-called 'mortgage prisoners'.

 What has happened?

A personal insolvency arrangement (PIA) was originally rejected by mortgage service firm Pepper Finance to give a financially distressed couple a fixed rate of 2.5% for 25 years. Tullamore Circuit Court then overturned that decision, compelling Pepper to accept the terms.

Why is the Tullamore Circuit Court ruling so significant?

According to data, around 30,000 borrowers are in similar circumstances, and such arrangements would give them a lifeline to restructure their debts and keep up payments on their homes. 

What is a "mortgage prisoner"?

There are around 60,000 borrowers stuck with vulture funds after their loans were sold to them by other financial lenders. 

This is despite many of these customers never actually having been in arrears. Their loans were just part of a tranche that were sold off to vulture funds. It is estimated that just a third of the 60,000 borrowers currently are in arrears. 

Therefore, while PIAs will not be relevant for the majority, it could offer a lifeline to many.

Pepper Finance is not the owner of the loan in question in the Tullamore case, so what is its role?

Pepper services the loan on behalf of a so-called vulture fund, which was not named in the Tullamore case. 

However, Pepper has its own policies, including not offering fixed rates to customers, meaning thousands are caught with tracker or variable mortgages which have considerably higher repayments currently. 

What are the potential implications of the court decision?

It could "open the floodgates" for other customers in similar financial situations as the couple in question, to try their luck with a PIA involving a fixed rate over the long term, according to financial experts.

Has there been any political reaction to the outcome of the case in Tullamore?

Finance Minister Michael McGrath said it was a welcome decision. 

He said: “I believe that loan owners and mortgage providers should be offering fixed-rate options to their borrowers. This is an issue I’ve raised directly with them and also with the Central Bank. 

"We know for example that Pepper has not been offering fixed-rate product solutions to borrowers and I do think for some customers that certainty of knowing how much they will have to pay over the years ahead is very valuable."

What is a PIP and what is a PIA?

According to Money Advice and Budgeting Service (Mabs), a personal insolvency practitioner (PIP) is a qualified financial practitioner under the Personal Insolvency Acts. 

"They are usually a qualified accountant, solicitor, or barrister trained specifically to manage personal insolvency and mortgage arrears with their clients. They are regulated by the Insolvency Service of Ireland. You can reach out to a PIP directly, or you can contact MABS to access the service," MABS said.

A PIA is an arrangement that proposes how to resolve your mortgage arrears and any other debts you may have, MABS add. "It can range in length from six months to six years and is approved by all your creditors to return you to solvency. This means you’ll have an affordable monthly payment for the duration of the arrangement. 

"The arrangement will also clarify your payments after the arrangement, so there are no surprises. Your affordability will be based on the Reasonable Living Income guidelines set by the Insolvency Service of Ireland and allow you to live comfortably."