Mortgage hunters: Time to look beyond the five main banks?

Several niche mortgage operators are already in business here, with more on the way

When you’re in the market for a new mortgage, it makes sense to widen your net as far as possible and make yourself aware of all available deals. Increasingly, this means extending your search beyond the five main banks.

According to the Central Bank, the total value of the 17,415 mortgage loans extended in the first half of this year was €3.75 billion, up 22 per cent year on the same period of 2017. Of this, 97 per cent was lent out for owner-occupied loans with the balance for buy-to-let mortgages.

Some 35,472 new home loans were issued last year, with a combined value of €7.4 billion. According to figures from the Central Bank, the average rate of interest on a new home loan in the Republic in July was 3.2 per cent, while the average across the euro zone was put at just under 1.8 per cent.

As it stands, AIB (including EBS) has a 33 per cent share of the residential mortgage market, while Bank of Ireland has 28 per cent. The remaining 39 per cent is split between Permanent TSB, Ulster Bank and Belgian lender KBC.


As the market stands, a customer looking for an 80 per cent mortgage on a €350,000 property for 25 years will get the lowest interest rate with AIB at 2.95 per cent. With KBC, the interest rate is 3.05 per cent, 3.2 per cent with Ulster Bank, 4 per cent with Permanent TSB and 4.2 per cent with Bank of Ireland.

On a tier below the big five are niche players such as Pepper, Dilosk and others, including local authorities.

Local authorities

Earlier this year, the Government launched a "Rebuilding Ireland Home Loan" for first-time buyers. Available through local authorities, the loan is for those looking to purchase a new, second-hand, or self-build property. First-time buyers can borrow up to 90 per cent of the market value of a property. The maximum market values are €320,000 in Cork, Dublin, Galway, Kildare, Louth, Meath and Wicklow and €250,000 in the rest of the State. The rebuilding Ireland option offers interest rates starting from 2 per cent for up to 25 years.

Pepper Money

Australian group Pepper Money probably has the widest-ranging product set of the niche lenders. It offers mortgages for both owner-occupiers and buy-to-let mortgages.

The company also offers loans for self-employed people and those with credit histories that mean a straightforward bank mortgage is a struggle. The company’s interest rates range from 3.1 per cent to 5.7 per cent depending on the category of mortgage. For first-time buyers, Pepper will provide a mortgage up to €450,000 for terms of between five and 30 years.

Credit unions

Credit unions in the State can provide mortgages, although they’re restricted by Central Bank rules, which only allow 10 per cent of credit union loans to have a term of more than 10 years.

However, the financial regulator might be about to loosen those restrictions with one of its deputy governors, Ed Sibley, saying it will soon be consulting on ways to expand credit unions' abilities to lend.

In their current form, the rules have proven restrictive to those credit unions that have already entered the home loan business. St Raphael's Garda Credit Union - the State's largest - started offering mortgages in March 2016 but was forced to stop within three months, having reached the Central Bank limit after issuing about €22.5 million of home loans.

It should also be considered, however, that the Central Bank is preparing to loosen restrictions on credit unions providing home loans.


Having established in the Irish market through the acquisition of Bank of Ireland’s ICS mortgage brand in 2014, Dilosk provides loans for buy-to-let borrowers looking to purchase or refinance residential investment properties in the Republic.

The company also intends to offer owner-occupier mortgages in the first half of 2019, describing this as a “natural evolution for Dilosk”.

In January 2017, Dilosk launched a €200 million facility to boost the rental market, offering better access to finance for buy-to-let investors.

For individual buy-to-let investors the company’s products include a five- to 15- year interest-only option, a “flexi-mortgage” and a five- to 20-year capital and repayment option. The company’s rates start at 4.29 per cent and go up to 5.59 per cent while its mortgages are offered through brokers.

An Post

To much excitement, it has been reported that the State-owned postal group is looking to enter the mortgage market, undercutting the Republic's main banks by a significant 1 percentage point. While the news rattled investors in Bank of Ireland and AIB, An Post has not yet named a partner to finance its mortgage move. Nevertheless, it seems to be planning an assault on mortgages in the middle of next year.

Finance Ireland

Backed by the Ireland Strategic Investment Fund, Finance Ireland appears to be planning an entry into the mortgage market. The Sunday Times reported last week that the company would announce its plans within weeks.

Founded by former Permanent TSB chief executive Billy Kane, Finance Ireland is backed by US investment group Pimco.

At present, it provides motor finance, SME and agri finance, commercial mortgages up to €10 million and a loan product to dairy suppliers in co-ops. Kane told the Sunday Times that the mortgages would be competitive but not necessarily market leading.


It was thought last week that Spanish lender Bankinter, would look at the Irish mortgage market after its takeover of the Avantcard business. The Madrid-headquartered bank has just cut rates on its 20-year fixed-rate mortgages to 1.99 per cent. However, in response to a query from The Irish Times, it ruled out a move into the mortgage market, saying it planned to concentrate on smaller personal loans.