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Home-loan price war: lowest rates in 10 years as new lender shakes up market

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Charlie Weston Twitter Email

September 14 2020 02:30 AM

A new mortgage lender backed by a Spanish banking giant is set to shake up the market here with the lowest lending rates.

Avant Money's entry is set to put massive pressure on existing lenders to slash their rates, as the launch today is set to spark a new price war.

It is offering fixed rate mortgages as low as 1.95pc, by far the lowest rate in the market, the Irish Independent has learned.

The company, which has bases in Carrick-on-Shannon and Dublin, is backed by Spain's Bankinter, a bank which has €93bn in assets.

Its entry here is set to be a big shock to the market as it will be the first sub-2pc lender in more than a decade.

Avant Money is aiming to sign up first-time buyers and movers, but is also set to make a very strong play to get switchers on board.

Applications will be open to borrowers who meet Central Bank lending limits and Avant Money's lending criteria.

There was a fear that the new competitor was due to cherry-pick the market and only lend to high-income borrowers such as medical professionals and public servants, but this is not the case.

However, the new lender's operations will be limited initially to the larger urban areas and surrounding commuter belts.

It is offering three, five and seven-year fixed rate products. Its three-year rate goes from 1.95pc for those borrowing 60pc or less of the value of the home, to 2.35pc for those with a loan to value (LTV) of greater than 80pc..

The lender's new suite of mortgage rates is either the lowest in the market or equal to the best in the market.

As is common practice now, lower rates will apply depending on how much people are borrowing relative to the value of the property, the so-called loan-to-value ratio.

There are no gimmicks, such as cash-back offers or requiring people to take out a current account to benefit from a lower rate.

Chris Paul

A switcher couple, who have built up equity and only need to borrow 60pc of the value of their home, will qualify for a rate of 1.95pc.

Assuming this couple is borrowing €750,000, Avant Money will be €4,500 a year cheaper than the best alternative seven-year fixed rate in the market for switchers.

That is one percentage point lower than the next best alternative.

For a first-time buyer couple, borrowing €250,000 with an 80pc LTV, the new lender will be €450 a year cheaper than the best alternative at the moment.

That is on a three-year fixed rate, with a 30-year term.

A mover couple, borrowing €400,000 with a 70pc LTV, will be better off by €800 a year compared with the next best in the market by getting a five-year fixed-term with a 20-year mortgage.

Avant Money is already a leading provider of credit cards and personal loans here, both under its own brand and through its partners, Chill Money and An Post Money.

Chief executive officer Chris Paul said: "Unlike other providers, we have shunned short-term gimmicks such as cash-back offers in favour of products and rates geared towards providing true, quantifiable savings over the life of a typical mortgage.

"Supported by our parent, Bankinter, and building on our strong consumer finance heritage, we are looking forward to bringing better value to customers."

The lender has signed up 19 brokers who will offer its products, rather than having a direct sales channel.

Home-loan price war: lowest rates in 10 years as new lender shakes up market

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