New mortgage lender shows Irish banks 'can cut home loan rates'

New mortgage lender shows Irish banks 'can cut home loan rates'

Compared to June 2019, rents dropped by an average 3.3% last month.

The official launch by new mortgage entrant Avant Money of a fixed-term mortgage below 2% for second-time buyers or switchers shows that Irish lenders can make money by cutting home loan rates, a leading broker has said.

Avant Money, which is owned by Bankinter, a lender that already sells mortgages in its home country of Spain and in Portugal, had signalled in July plans to take on existing Irish lenders, which charge among the costliest home loan rates in Europe.

It has now unveiled fixed-rate mortgage rates of 1.95% which appear to be aimed at second-time buyers and switchers at a loan-to-value (LTV) rate of up to 60%, and taken aim at some of the first-time buyer market with a three-year fixed rate of 2.35% for loan-to-value of over 80%. That rate reverts to a variable rate of 2.75% at the end of the fixed term.

Leading industry mortgage broker Michael Dowling said its cost for LTV loans of up to 60% showed it was possible for Irish lenders to lend at rates below 2% “and still make money”.

Daragh Cassidy at said other lenders would likely respond too after AIB cut its fixed-rate mortgages by up to 0.2%.

“However, while the headline rate of 1.95% from Avant Money is certainly eye-catching and will capture all the headlines, it requires a deposit of at least 40% which will be vastly unachievable for most first-time buyers," he said.

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