Mortgage market set for shake up as new players poised to enter

EXPECTATIONS of further entrants to the Irish mortgage market were welcomed last night.

It has been confirmed unidentified British mortgage lenders are taking a close look at the market. Abbey National and Halifax were two of the names mentioned, but they discounted any existing interest in getting involved here.

Bank of Scotland set the market buzzing two years ago when it undercut the then mortgage rates on offer to the Irish consumer. As a result the cost of mortgages fell by 0.5% and left the Irish players exposed. They claimed they were operating at full stretch and could not afford to lower rates as margins were already pared to the bone.

But most Irish players including the big banks and Irish Life & Permanent who combined have 60% of the mortgage market all cut their rates to ensure they held on to their closely defended market shares.

Talks have been ongoing between the unnamed potential entrants to the market and the Irish Mortgage Advisors Federation which refused to disclose the identities of the two financial institutions involved in the discussions.

Jim Power head of investment strategy in Friends First and a leading Irish economist welcomed the move.

“Even if they do not come in they will keep the rest of the market on its toes and that will be good for the consumer. The threat of fresh competition should keep the big players here from getting complacent and taking the Irish consumer for granted,” he said.

However, one senior mortgage source cast doubt on the likelihood of fresh competition. While it would help shake up the market further he thought such a move would be very difficult to justify unless the banks or building societies involved bought an existing player in the Irish market.

The federation declined to disclose the identity of the banks and building societies currently in talks with it. Apart form the names already discounted, Nationwide, Standard Life, Alliance were the other names linked with the move.

Sarah Wellband of Rea Mortgage Services said the Irish market was attractive. Home ownership is very solid and the level of repossessions at 300 last year is quite low.

Bad debts and other problems tend to be low which makes the Irish market an attractive prospect from a lender’s point of view, she said. Mr Rankin added while it is questionable if the Irish market is big enough to support two more heavyweight players, the Irish banks will have to be on their toes to see off another competitor.