Making Cents: Moves in the mortgage market may mean savings

Making Cents: Moves in the mortgage market may mean savings

Planning for the future

I have written a lot about mortgages in recent weeks, talking to an expert about a number of topics, including fixed rates and switching. I had intended to move to other topics for a while but a number of moves in the housing market in recent days are worth highlighting.

The news, announced earlier this year, that Avant was entering the Irish mortgage market was greeted with delight by brokers and now we know exactly why they were so pleased.

"Avant Money will initially be offering a market-beating 1.95% three, five and seven-year fixed rates on less than 60% loan to value with a follow-on variable rate of 2.5%,” Martina Hennessy, Managing Director of doddl.ie. explained. “They have come to market offering fixed rates of 3, 5 and 7 years with strong follow on variable rates.

“At every loan to value bracket, they offer rates that are equal to or lower than existing rates on market offering value to consumers regardless of loan to value.

“The introduction of Avant Money’s lower fixed rates is very timely as three-quarters of all new mortgage customers to end June took a fixed option over a variable.

“Where lenders on market currently offer fixed rates tiered by loan to value of less than 60%, 60 to 80% or over 80, Avant Money discount at every 10% loan to value interval.” Consumers cannot get these deals by going directly to Avant Money, who instead are offering their mortgage products via a select number of mortgage brokers, including Doddl.

Irish Mortgage Corporation (IMC) is another of the mortgage brokers working with Avant and they have crunched the numbers to see how much homebuyers could save as a result of these new rates.

In Cork City, the average price of a 4-bed semi is €358,750. Over the course of 30 years, with the most expensive lender, IMC calculates a buyer will pay back €220,611 in interest. “Though if buyers now choose Avant Money as their lender, they will only pay back €129,793 in interest,” a spokesperson said. “Over 30 years, that is a huge saving of €90,818.” It is important to note that Avant is only offering mortgages to homebuyers in specific geographic areas. 

Currently, they are Dublin county plus any town within 30km of Dublin county border, Cork city plus locations within 30km of Cork city centre, Galway city plus locations within 30km of Galway city centre, Limerick city plus locations within 20km of Limerick city centre and Waterford city plus locations within 20km of Waterford city centre.

The good news for people outside those areas is Avant are not the only ones bringing new rates to the mortgage market.

AIB, who is Ireland’s largest mortgage provider, has introduced a range of Loan-to-Value (LTV) fixed-rate mortgages which will see the bank offer a range of fixed price points for customers, including rates as low as 2.25%.

“Our new LTV fixed-rate bands give customers the opportunity to reduce their mortgage repayments as their capital balances reduce,” Colin Hunt, CEO of AIB said. “We have also introduced new LTV bands for our Green Mortgage, further supporting Ireland’s transition to a low-carbon economy.” 

The company also announced that Haven, their intermediary channel, will be offering €5,000 cashback for new customers who draw down a fixed-rate mortgage of €300,000 or higher.

Brokers are clear on the potential benefits for consumers, even if you are happy with your current repayment, there are opportunities to make long-term savings.

“With the new market-challenging rates announced by Avant Money, the new lower fixed rates from AIB, and Haven’s latest €5,000 cashback offer, there has never been a better time for existing homeowners to consider switching provider and save thousands of euro on their mortgages,” Trevor Grant, Chairperson, AIMA (Association of Irish Mortgage Advisors) said. 

“Our members regularly meet consumers who are paying €200 - €300 a month more than they need to, which is not an effective use of their hard-earned money. “With so many offers out there, many if not most homeowners could now secure a better deal for themselves if they shopped the market.”

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