Mortgage “prisoners” whose loans were sold to vulture funds are coming under increasing pressure to meet higher repayments, a service that supports those who are struggling financially have told politicians.

The Money Advice and Budgeting Service (Mabs) told the Oireachtas Finance Committee it was “alarming” vulture funds were pushing mortgage rates so high.

The hikes are proving “disastrous”.

Social policy and research executive with Mabs Dr Amie Lajoie said interest rates being charged to those with loans were sold to vultures were over 6pc, and well over this.

This includes people who are in a voluntary alternative payment arrangement, and those with a court-approved personal insolvency arrangement in place.

Some 113,000 loans were sold by the main banks to vulture funds. Many of these are regarded as being non-performing.

Around 38,000 of these borrowers are on variable rates that have gone up to around 8pc, and higher, since the European Central Bank (ECB) announced five rate hikes since the summer. Vultures do not offer fixed rates, trapping these 38,000 borrowers on rising variable rates.

Dr Lajoie told the committee: “The interest rate hikes serve as a particularly alarming trend during a cost of living crisis, and is having disastrous effects.

“With another 0.5 percentage points rise in mortgage interest rates indicated by the ECB, we are wary that the situation will continue to worsen.”

She told committee chairman John McGuinness that the loans were bought by the vultures from the main banks at a steep discount.

Dr Lajoie accused the banks of “losing patience” with the process of engaging with borrowers struggling to meet their mortgage repayments.

They instead decided to “cut their losses and sell”.

Mabs told the TDs and senators it was difficult for credit servicing firms to reach management repayment arrangements with distressed borrowers because documents have often not been transferred to the credit servicer operating on behalf of the vulture.

“In Mabs’ experience, relevant loan documents and statements are often lost during the loan sale process, and this makes it difficult to validate the accurate accrual of debt and arrears balance.”

Mabs said it had some of its busiest periods on its helpline in the past few months as increasing numbers try to access its service.

The State-supported money advice service said rising interest rates would push more people into default.

It emerged last week that banks sold thousands of tracker mortgages to vulture funds – despite having to admit they overcharged on them.

The trackers were regarded as non-performing, even though the borrowers involved were overcharged.

A total of 2,315 tracker accounts were sold to vultures by the State’s five retail banks where the tracker account holders were overcharged. This was done by being denied a tracker or being put on the wrong tracker interest rate.

The figures were obtained by the Oireachtas Finance Committee and released by Sinn Féin’s Pearse Doherty.