Avant raises mortgage rates for third time as ECB eyes next move

Avant Money, which entered the Irish mortgage market two years ago with rates starting below 2 per cent, has increased the cost of new loans for the third time this year as financial markets price in further moves by the European Central Bank (ECB) on interest rates in the near term.

The Spanish-owned nonbank lender said it was increasing its fixed rates by an average of 0.75 of a percentage point, but individual moves range between half and one point.

“We continue to see interest rates increase and regrettably are passing these on to our customers,” said Brian Lande, head of mortgages at Avant Money.

Avant Money’s three-year fixed rate for loans of up to 60 per cent of the value of a property, which were set at 1.95 per cent when the lender entered the Irish home loans market in late 2020, will carry a rate of 3.25 per cent from Thursday, following rate increases earlier this year.

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Still, the lender, which is part of Spanish banking group Bankinter, is now the only mortgage provider in the State that is continuing to offer fixed rates for greater than 10 years, after Finance Ireland moved last month to temporarily withdraw from this segment of the market.

Avant Money trebled the size of its Irish loan book in the first nine months of the year, to €2.1 billion, as it accounted for 10 per cent of new lending in the market, according to Bankinter’s latest quarterly financial statements.

The lender increased rates in May as nonbank lenders were caught out by a spike in wholesale borrowing rates in anticipation of a raft of ECB rate hikes. It moved again in August, a month after the ECB first started to increase official rates.

The ECB has increased its main lending rate from zero to 2 per cent since July and is widely expected to add another half-point to borrowing costs when its governing council meets next week. Nonbank lenders have led mainstream banks in raising mortgage rates in the Republic so far this year.

While Avant Money’s new rates will be effective from Thursday, customers with a current offer letter can avail of the existing rates if they draw down their mortgage by January 20th.