The market is changing
In the 70's and 80's the idea was to build a steady relationship with your local bank. Have a deposit account and show some regular savings. Then hopefully your local bank would help you out when it came to the time for your first mortgage. These days are gone !
The first stage was aggressive competition between the banks themselves. Entrants like Bank of Scotland were a big feature of the Celtic Tiger and pre-crash lending. Borrowers were free to approach any bank and approvals could be gained quickly.
What banks are still active in mortgage lending?
AIB and Bank of Ireland are still there. Ulster Bank is here - although NatWest is now running down the activities of Ulster Bank in Ireland. Permanent TSB survived the financial crisis although it remains majority owned by the Irish government. As does AIB.
The fifth bank lender is the Belgian bank, KBC. But like Ulster Bank, KBC has announced that it will be leaving the Irish market. Its loans will be sold to Bank of Ireland.
The former building society, EBS, originally founded in 1935 to lend to civil servants and teachers is, as of 2011, a full subsidiary of AIB. Although it markets itself as though it were independent, we will not count it as a separate lender.
Similarly Haven Mortgages is fully owned by AIB and we will not count it separately.
We are also not counting the likes of Pepper. Pepper is currently servicing the mortgage loans arising from, amongst others, Bank of Scotland's ill-fated entry into the Irish residential mortgage market. Pepper is not making new residential mortgages. They exited the market in 2018 with a €200million portfolio sale to Finance Ireland.
But the non-bank sector is growing
After the heavy losses taken throughout the financial crisis, the higher capital requirements and the increased regulatory scrutiny, the profitability and size of Irish banks is diminished. We have seen new non-bank entrants to the mortgage market.
These lenders are regulated by the Central Bank of Ireland. They must follow the same rules on mortgage lending as the banks. Unlike the banks, these lenders do not have a natural deposit base for funding. However, they finance themselves in the securitisation market.
Finance Ireland is backed by the Irish Strategic Investment Fund and PIMCO. It is headed by former Permanent TSB chief executive, Billy Kane.
Dilosk bought the ICS mortgage brand from Bank of Ireland in 2014. It initially began as a lender for investment properties only but is now lending for owner occupied properties too.
And, at our count, that brings us to seven different mortgage lenders currently lending in the Irish market.
And the new arrival?
Yes, Avant Money is now lending in the Irish market. Avant Money is owned by BankInter the Spanish bank. Currently Avant Money are the cheapest in fixed rates if you have an LTV of 60% or less. They have been in the Irish market in the credit card and personal loan space and are now in the mortgage market.
Its initial offerings include a fixed rate of 1.95% for 3, 5 or 7 years. This brings the count to eight different mortgage lenders. But with Ulster Bank and KBC gone, we will be down to six.
Irish mortgage rates remain in excess of mortgage rates in other European countries. Only competition will bring them down. From a consumer point of view, the more lenders the better ! Will we see the emergence of more non-bank lenders to challenge the domestic Irish banks ? Time will tell.
AM Financial is a mortgage broker in touch with a large choice of lenders. Please contact us to see lending offers across the board and to get you the best deal!
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