Reduction by new lender puts pressure on banks to cut variable rates
Pressure has mounted on banks to cut their variable mortgage costs after a new lender announced a large reduction in its interest rates.
New lender Pepper is to reduce its rates by up to 0.45pc.
The Australian-owned firm began lending here at the start of the year. Its new variable rates are now as low as 3.1pc, one of the lowest in the market.
This rate applies to new buyers who are borrowing 50pc or less of the value of the property. The cuts take effect from the beginning of this week.
Pepper is also cutting its buy-to-let mortgage rates by up to 0.20pc. The lender targets "prime" residential and buy-to-let borrowers.
It also has a special loan product for the self-employed and others in what it calls non-standard employment. The rates on these loans are coming down by up to 0.45pc.
Rates are also being reduced on a product aimed at those who have been in arrears in the past but are up-to-date on payments now. These people cannot borrow from mainstream banks.
Rates on what it calls the Pepper Advantage Product will come down by between 0.15pc and 0.35pc. The rates will go from 3.85pc to 5.05pc, depending on how much equity there is in the home.
Pepper, which manages 50,000 loans here for other lenders, launched its own loan offering here in January. It operates through brokers.
It is targeting first-time buyers, switchers and those taking out buy-to-let mortgages.
Pepper chief executive Paul Doddrell said: "We are committed to sustaining competitive prices in the market, reviewing and expanding our product range and developing new distribution channels in the future.
"Our aim is to grow our lending operation and offer even more choice for Irish customers."
Another lender hoping to shake up the market, Frank Money, is still awaiting authorisation from the Central Bank to begin issuing mortgages.
The Pepper rate reductions come after AIB and its subsidiary Haven reduced variable rates.
KBC Bank and Ulster Bank have also lowered their mortgages rates.