Avant Money to raise mortgage rates after ECB rate hike

Move follows a tightening of lending rules by ICS Mortgages which has capped loans at just 2.5 times a borrower’s income

Avant Money and ICS Mortgages have introduced changes to their mortgage offerings. Photograph: iStock

Avant Money, the mortgage provider owned by Spanish banking group Bankinter, will increase its mortgage interest rates from Monday following the recent rate hike from the European Central Bank.

The lender, which was formally known as Avant Card, is a provider of mortgages, personal loans and credit cards in the Irish market, both under its own brand and through its partners Chill Money and An Post Money.

In a note to brokers on Friday, Avant said it was increasing its mortgage interest rates with effect from Monday. “Market funding costs have risen sharply this year and with one ECB rate change already announced, more are anticipated,” it said.

It said it would increase its three-year fixed rate product by 0.3 of a percentage point so that rates will start from 2.25 per cent.


Its four-year and five-year fixed rate products will increase by half a point, while its seven-year fixed rate product will go up by 0.7 of a percentage point.

Avant Money also offers longer term fixed rate mortgages with terms fixed up to 30 years. It said the cost of these mortgages would increase by one percentage point.

Avant said its current fixed rates would continue to be available to customers with a “letter of offer” dated before August 15th who completed full mortgage drawdown by close of business on September 9th.

The group’s follow-on variable rate will change to 2.45 per cent for loan-to-values up to 70 per cent and to 2.7 per cent for loan-to-values above 70 per cent.

Brendan Burgess, founder of askaboutmoney.com, said it was unlikely other lenders would follow suit and raise rates.

“Other lenders have been losing business to Avant,” he said. “Even with this rate increase, Avant’s mortgage rates are still cheaper than most of the other lenders, so the other lenders would be foolish to follow suit or they will continue to lose business.”

Avant Money is based in Carrick-on-Shannon, Co Leitrim, and has a second office in Dublin. It employs 250 staff and has been providing credit cards and personal loans to Irish consumers for more than 20 years. Bankinter is the fourth-largest Spanish bank.

It offers mortgages across all residential home markets, including first-time buyers, home-movers and mortgage-switchers.

The increase follows a tightening of lending rules by rival ICS Mortgages, which has capped the size of new home loans at just 2½ times a borrower’s income.

It also introduced loan-to-value restrictions of 80 per cent and 70 per cent for first-time buyers and second-time buyers respectively. Going forward, a minimum income of €50,000 is required for a single person, or €100,000 for a couple.

Buy-to-let lending remains unchanged, albeit that market accounted for just 1.2 per cent of mortgage drawdowns of €5.6 billion in the first half of 2022.

The minimum loan size has been increased to €150,000, while the maximum loan has been reduced to €500,000. There will be no equity release in switcher applications, and no variable pay amounts allowable for PAYE applicants.

It said the changes were driven by “prevailing market conditions”, and that it intended “to reverse all of these temporary changes as soon as markets normalise”.

In a note on Friday, Goodbody said the move from ICS was the “latest indication of the challenges faced by non-bank lenders in a rising rate environment”. An analyst with Davy said the move to “significantly tighten criteria comes as somewhat of a surprise but is set against a backdrop of higher funding costs and a strong performance so far in 2022”.

“Due to their funding model, non-bank lenders are more sensitive to changes in market conditions but will remain an important part of the mortgage market given the structural changes in Ireland from bank exiting and the increase in mortgage intermediation,” he said.

“Non-bank lenders had some advantages relative to bank lenders when official rates were negative. Some of these advantages, particularly related to funding, are now unwinding.

“However, we would anticipate that non-bank lenders will continue to play an important role in the market in future years given the material increase in the last number of years in broker intermediation.”

Colin Gleeson

Colin Gleeson

Colin Gleeson is an Irish Times reporter