Mortgage competition intensifies with the introduction of fixed 30-year rates

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Second lender in just over a month has pledged the option of multi-decade fixed rate mortgages in an attempt to shake up competition following Ulster Bank and KBC Bank Ireland decisions to exit the market banking.

Hailed as “a step in the right direction for the Irish mortgage market,” Spanish lender Avant Money has said it will offer mortgages with fixed interest rates for up to 30 years.

It will offer fixed rates of between 2.25% and 3.16% on fixed-rate mortgage loans covering terms of 15, 20, 25 and 30 years. It is the first 30-year fixed rate mortgage product introduced in Ireland.

Last month, alternative lender Finance Ireland first launched a 20-year fixed-rate mortgage in Ireland, saying it is targeting a 15% share of the home loan market.

Avant has said it wants to be the fourth largest mortgage provider after AIB, Bank of Ireland and Permanent TSB.

Widely welcomed

The increased activity was widely welcomed.

“With the departure of Ulster Bank and the potential departure of KBC from the mortgage market, Avant’s presence and other non-bank lenders and their innovation are essential for competition,” said Trevor Grant, President of the Association. of Irish Mortgage Advisors (AIMA). .

“Not only does a 30-year fixed term offer the promise of a guaranteed level of long-term mortgage repayments for mortgage holders who opt for it, it is also a step in the right direction for the Irish mortgage market. . We’re catching up with our European counterparts when it comes to fixed rates – and overall better value on rates, ”said Joey Sheahan of MyMortgages.ie.

Other lenders will now find themselves under pressure to develop and offer better mortgage products in order to remain competitive. “

Competition is expected to widen further, with An Post planning to start selling mortgages next year and digital payments company Revolut confirming that it will apply for a full Irish banking license, which could potentially allow it to offer mortgages to Irish customers. However, both are likely to do so, as part of a partnership and underwriting structure, with an existing bank or financial service provider.

The shares of the two main lending banks – AIB and Bank of Ireland – fell significantly. Bank of Ireland shares lost more than 5%. He announced new measures on his non-performing loans, saying he had agreed to securitize a portfolio of non-performing mortgages.

The portfolio of loans in the process of being shed has a gross value of around € 350 million. Bank of Ireland said the deal is expected to reduce the percentage of non-performing assets in its loan portfolio to around 5.3%, from 5.7%.

Central Bank figures this week showed a drop in the total number of mortgage arrears, but an increase in the number of restructured mortgages, indicating borrowers are struggling to meet their scheduled repayments.


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