Making Cents: New mortgage providers shake up the market

'Recent developments clearly show that it is the smaller, newer lenders who are offering some of the best value right now'
Making Cents: New mortgage providers shake up the market

"It is extremely positive to see non-bank lenders so committed to the mortgage market at a time when some banks have decided to exit." Picture: iStock

It is a difficult time to be a house buyer but experts say recent developments mean that the key move when looking for a mortgage is not to limit your search to the big names of Irish banking.

High lending rates have long been a concern and this worry is only exacerbated by the impending exits of Ulster Bank and KBC.

Daragh Cassidy, head of communications at comparison site bonkers.ie, highlights that Ireland has among the highest mortgage rates in the Eurozone.

“The average rate on a new mortgage here is currently 2.80%, which is over double the currency bloc’s average of 1.27%,” he says.

But there have been positive announcements from smaller lenders in the last 12 months and last week ICS mortgages became the second lender in Ireland (after Avant Money) to offer a rate below 2%. 

Mr Cassidy says it is important for borrowers to consider specialist lenders like ICS in their search for a mortgage.

“Avant Money, Finance Ireland, and even ICS may not be familiar names to many mortgage seekers, who may be tempted to go to more well-known lenders such as AIB and Bank of Ireland as their first port of call,” he says.

“However recent developments clearly show that it is the smaller, newer lenders who are offering some of the best value right now and I would encourage any prospective homebuyer or switcher to consider these lenders for their mortgage.”

The ICS announcement, which is effective from yesterday, sees its entire suite of new residential mortgage interest rates reduced, by up to 0.5% (APRC 0.49%). It now offers fixed interest rates starting from 1.95% (APRC 2.29%) and variable interest rates starting from 2.45% (APRC 2.53%).

It is important to note that the headline lowest rates are offered to those with a loan-to-value ratio of less than 60%, and so will not be available to most first-time buyers. But it also has competitive rates at higher loan-to-value ratios.

Growing importance

Association of Irish Mortgage Advisors chairperson Trevor Grant agrees that the announcement highlights the growing importance of non-bank lenders in the market.

“The announcement combined with the launch of rates and products delivered by Finance Ireland and Avant Money earlier this summer has finally put a death knell on the outdated concept of consumers only approaching their existing current account provider and expecting them to deliver the best deal in the market,” he says.

“Your own bank may offer you their best mortgage terms, but they are not obliged to tell you that better terms are available with other lenders.”

Avant Money entered the market in August and along with Finance Ireland, launched new long-term flexible fixed-rate products earlier in the summer. 

“ICS has now become the first lender to match this market-leading rate, making sub-2% the new norm for many homeowners with strong levels of equity in their homes,” Mr Grant says.

The percentage of mortgage applicants being made through mortgage brokers has grown from 25% in 2019 to 40%. 

“The development and interest rate reduction in lower and longer-term rate fixed offerings, available for homebuyers at all loan-to-value bands, means that the majority rather than the minority of consumers can now secure a lower rate on their new or existing mortgage,” Mr Grant says.

He believes this figure will rise if consumers continue to go to brokers and mortgage specialists rather than accepting their current banks’ mortgage offering without shopping around.

“From a consumer perspective, it is extremely positive to see non-bank lenders so committed to the mortgage market at a time when some banks have decided to exit,” he says. 

“Non-bank lenders have lower costs, are agile, and have clearly demonstrated that they are capable of delivering product development and innovation. This can only be viewed as good news for consumers.”

Cheaper streaming with Tesco

With the downturn in the weather, parents may find themselves hardpressed to keep children entertained indoors. Good news so for Tesco shoppers, as Tesco Ireland announces members of its Clubcard rewards programme can avail of deals from two new partners, including Disney+. 

Clubcard holders can exchange €9 worth of Clubcard vouchers for a full three-month subscription to the streaming service.

Titles launching this month on Disney+ include Cruella, McCartney 3,2,1 and The Walking Dead — joining hundreds of movies on Disney+ including Frozen, The Avengers: Endgame, Luca and Star Wars: The Rise of Skywalker.

Seven different profiles can be set up on Disney+ with unlimited downloads on up to 10 devices. Customers can stream on up to four different screens at the same time.

Tesco has also partnered exclusively with Hotels.com, giving Clubcard members the chance to avail of €15 off at Hotels.com for every €5 Clubcard voucher earned.

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