Spain's Avant extends Irish reach of cheaper mortgages

Avant Money, the mortgage provider owned by Spanish banking group Bankinter, is expanding its low-cost mortgage offer to a range of new locations across the State. The move could increase pressure on other lenders to cut rates, with data showing Avant now accounts for almost one in five of all mortgage switches in the Republic.

Avant launched its Irish mortgage product last September, significantly undercutting existing players with its lowest rate of 1.95 per cent available for those whose mortgages are worth 60 per cent or less of the purchase price of their home. However, it initially focused on the five largest cities and their surrounding commuter belts (Dublin, Cork, Galway, Limerick and Waterford). Now, it is extending its reach, and from this month will start lending to homeowners based in Athlone, Carlow town, Dundalk, Kilkenny city, Portlaoise and Wexford town.

Mortgage rates

According to the lender, the move will see it covering 71 per cent of properties in the State. It will to extend this further in due course.

Brian Lande, head of mortgages for Avant Money, said: "We are delighted to continue our growth in Ireland and to be bringing low prices to Irish consumers who have been charged the highest mortgage rates in Europe for far too long."

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Avant has also substantially increased the number of brokers it works with, up from 19 when it first launched, to 32. It expects to add to this panel over the coming months.

Unlike other lenders, which often offer cash back on the value of a mortgage or a lump sum to help with the cost of switching, Avant Money focuses on lower rates, a strategy which appears to be working. According to data from the Banking and Payments Federation of Ireland (BPFI), Avant Money approved almost one in five of all switcher mortgages in February.

Switching market

With Ulster Bank in the process of leaving the Irish market, activity is likely to step up in the switching market. The latest BPFI figures for March show that the level of mortgage switching increased to 15 per cent of all mortgage approvals.

Permanent TSB has recently adapted its strategy in this respect, introducing a new low rate of 2.25 per cent for new customers with a loan to value of less than 80 per cent. It is aimed at those customers who want a lower rate, rather than a cash-back offer.

Cash-back offers have attracted criticism from the Competition and Consumer Protection Commission for offering poor value for borrowers, as the rates associated with such products mean that homeowners end up paying more for their mortgage.