New mortgage lender to shake up market
Published 05/02/2016 | 02:30
A new lender is hoping to get approval from the Central Bank to enter the mortgage market.
Frank Money, founded by former Danske Bank executive Colin Cunningham, is aiming to shake up the stagnant mortgage market and pile pressure on other banks to lower variable rates, the Irish Independent has learned.
The Dublin-based operation is awaiting approval from the Central Bank, and has funding from pension funds.
It comes just weeks after Australian group Pepper entered the mortgage market.
Frank Money will issue mortgages through brokers and expects to compete hard with existing lenders, according to chairman of the Association of Expert Mortgage Advisers Trevor Grant, who has been briefed on the new operation.
"I understand the firm expects to be extremely competitive. We in the AEMA welcome any new lender coming in to shake up the market," Mr Grant said.
He said the aim was to under-cut the existing lenders, but the moves last week by KBC Bank to reduce its rates for new buyers had changed the lending landscape.
If it gets approval, the new lender would target new buyers and switchers, but especially those with large deposits, and switchers with equity in their current homes.
It is understood the operation is funded from pension funds in Ireland and Europe.
Frank Money is seeking approval from the Central Bank to operate as a retail credit firm, which would allow it to issue loans but not take deposits. This is the same form of authorisation used by Pepper.
Asked if Frank Money was awaiting approval to operate as a lender, a spokeswoman for the Central Bank said: "We can't comment on any pending applications for authorisation."
Frank Money's Mr Cunningham had no comment.
The current high variable rates have made it profitable for new lenders to enter the market.
At the moment, first-time buyers who get mortgage approval can expect to be charged between 3.2pc and close to 4.5pc. This is despite the record low ECB base rate of 0.05pc.
Australian lender Pepper recently unveiled plans to begin lending here, seeking to capture a slice of a market that is dominated by the so-called "pillar banks" AIB and Bank of Ireland.
And British-based mortgage provider Northview is mulling an entry to the Irish market.
Representatives of the Northview group, known until recently as the Kensington Group and which includes mortgage lender Kensington and mortgage servicer Acenden, have been meeting industry players in Dublin to run the rule over the sector in Ireland.