Tuesday 23 December 2014

Investec plan a welcome boost for home-buyers

Published 20/08/2013 | 05:00

Investec, which has been working hard to build its brand in Ireland, sponsors the Monaghan senior GAA team
Investec, which has been working hard to build its brand in Ireland, sponsors the Monaghan senior GAA team

IF there is one thing the struggling mortgage market needs more than anything else it is a new lender.

Just when the property market is showing signs of stabilising, with prices rising in Dublin, it emerges that banks are actually giving out fewer mortgages.

Still traumatised from the lending frenzy during the boom years, and unsure just how much they will lose from the current mortgage arrears mess, banks are now being extra cautious about lending for home buying.

Both those trying to buy a home, and those with an existing mortgage on a variable rate, should welcome the plans by Investec to enter the market here.

With no legacy of loss-making tracker mortgages, Investec is set to offer good-value variable rates.

It will offer mortgages through brokers, a low-cost distribution model.

And its presence will put pressure on existing players to hold off on new hikes in variable rates.

It is a sign of how much variable rates have risen that Investec now sees a chance to make money here.

Variable rates have been surging for two years, and are now between 4.5pc and 5pc for first-time buyers.

The specialist bank has been expanding in Ireland lately. It paid €32m for NCB Stockbrokers in January last year, and has since rebranded it as Investec.

It has had a presence here for 13 years and focuses on private banking, wealth and investment banking for a domestic and international client base.

It has been encouraged by a plethora of surveys showing that property prices in Ireland have stabilised after six years of sharp falls.

Once Investec has made its intentions clear, others could follow. Australian lender Pepper is also considering getting into the prime mortgage lending market.

A revival of sensible mortgage lending would benefit not just those hoping to buy, but would also help property prices recover, thus benefiting existing homeowners.

Irish Independent

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