Avant Money enters mortgage scene with lowest rate on Irish market

Pricing war begins as AIB responds with new loan-to-value fixed rate of 2.25%

‘Terminate the Help to Buy Scheme,’ says SJI, and use the €75 million saved to invest in homelessness prevention. Photograph: Rui Vieira/PA Wire

‘Terminate the Help to Buy Scheme,’ says SJI, and use the €75 million saved to invest in homelessness prevention. Photograph: Rui Vieira/PA Wire

 

Leitrim-based consumer finance company Avant Money has begun taking applications for its products from Monday with a fixed-rate mortgage offering that is the lowest on the market.

Avant Money, formerly known as Avantcard, is based in Carrick-on-Shannon with a second office in Dublin. It is owned by Spanish banking group Bankinter and has been providing consumer finance products to Irish consumers for more than 20 years.

The company was born out of US credit card company MBNA, which had a substantial presence in Carrick-on-Shannon, employing more than 1,000 people, before pulling out of the market in 2012.

The company announced it was to enter the Irish mortgage market in July. On Monday it confirmed its new mortgage products are now available to Irish customers, with fixed-rate mortgages starting from 1.95 per cent, which is the lowest rate on the market.

Avant Money also brings added competition to the Irish mortgage market with its new three-, five- and seven-year fixed-rate products.

Mortgages will be available to all customers, subject to the normal Central Bank of Ireland lending rules on loan-to-value and loan-to-income. Avant has appointed a number of brokers to process applications.

In response to Avant Money’s offering, AIB has introduced a new range of mortgages including a loan-to-value fixed rate of 2.25 per cent.

Customers on AIB’s current variable rate of 2.75 per cent would save €41 on their monthly repayments if they switched to a green five-year fixed rate of 2.25 per cent.

The calculation is based on a 25-year mortgage with a remaining balance of €160,000, a property valued at €350,000 and a loan-to-value of less than 50 per cent.

Similarly, customers currently on a standard variable rate of 3.15 per cent would save €89 on their monthly repayments if they switched to a 3 year fixed rate of 2.45 per cent.

The calculation is based on a 25 year mortgage with a remaining balance of €250,000, a property valued at €350,000 and a loan-to-value of between 50 per cent and 80 per cent.

Retail interest rate statistics from the Central Bank show that the weighted average mortgage rate rose three basis points in July to 2.82 per cent.

The average rate on new fixed-rate agreements fell one basis point to 2.67 per cent, a new series low, while the average new variable rate rose 24 basis points to 3.44 per cent.

In total, fixed-rate business accounted for 76 per cent of all new agreements in the three months to July.

The overall volume of new mortgage agreements amounted to €556 million, a decrease of 35 per cent on the year but up 13 per cent on the prior month.

Joey Sheahan, head of credit at MyMortgages.ie, said Avant Money’s entry into the Irish market was the “best news” for Irish mortgage holders.

“We have long seen European rates well below 2 per cent compared to closer to 3 per cent for Irish mortgage holders, and now, for the first time since before 2008, rates below 2 per cent are available to homeowners in Ireland,” he said.

“It’s a once-in-a-decade or maybe even two-decade opportunity where a new lender enters the Irish market and reduces interest rates to this extent.

“We are delighted to be one of Avant Money’s partners and our advice to mortgage holders is now is the time to review their current mortgage, even if they have done so recently.

“A mortgage holder with €300,000 outstanding with 32 years remaining and loan-to-value of below 60 per cent can save €158 monthly or €60,000 over the term of mortgage based on reducing interest rate from 2.95 per cent to 1.95 per cent.”

Avant Money executive Chris Paul said: “We are confident that our products and rates will be appealing to Irish customers who have been under-served for far too long when it comes to their mortgages.

“Unlike other providers, we have shunned short-term gimmicks such as cashback offers in favour of products and rates geared towards providing true, quantifiable savings over the life of a typical mortgage.”

Minister for Public Expenditure Michael McGrath said the added competition was good news for Irish home buyers.

“Mortgage rates in Ireland have been falling for awhile, but remain much higher than most eurozone countries,” he said.

“News today of a new entrant with low rates and rate reductions by existing lenders is very good news for consumers.”

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