New Spanish mortgage player prompts immediate reaction

THERE has been an immediate response to the entry of a new Spanish player to the mortgage market.

Spanish-owned Avant Money has shaken up the market with the first sub-2pc mortgages here for more than a decade.

It launched today with the lowest rates in the market here at 1.95pc.

This has prompted AIB to react by cutting its rates.

AIB’s new fixed rate mortgages will see its offer rates as low as 2.25pc, as competition heats up in the home-loan market. There are reductions of up to 20 basis points.

Both AvantMoney and AIB offer lower rates for those borrowing less relative to the value of the property. These rates based on loan to values (LTV) have become standard in the market.

Largely-stand owned AIB cut its rates earlier this year, but has been forced to move again with the new level of competition that has emerged.

The bank has a new ‘green mortgage’, with five-year fixed rates of between 2.35pc and 2.25pc. This is down from 2.45pc at present. A green mortgage is for a home with a high building energy rating.

AIB said customers on our current variable rate of 2.75pc would save €41 on their monthly repayments if they switched to a green five-year fixed rate of 2.25pc.

The calculation is based on a 25-year mortgage with a remaining balance of €160,000, a property valued at €350,000 and an LTV of less than 50pc.

The lender said customers currently on a standard variable rate of 3.15pc would save €89 on their monthly repayments if they switched to AIB’s new three-year fixed rate of 2.45pc.

The calculation is based on a 25-year mortgage with a remaining balance of €250,000, a property valued at €350,000 and a LTV of between 50pc and 80pc.

And Haven, AIB’s intermediary channel, to give customers a cash payment of €5,000 when they draw down new mortgages of €300,000 or more on a fixed rate.

AIB chief executive Colin Hunt said: “AIB is committed to unlocking value for both new and existing customers. Our new LTV fixed rate bands give customers the opportunity to reduce their mortgage repayments as their capital balances reduce.”

The cuts are seen as a response to Avant Money’s entry, which has put massive pressure on existing lenders to slash their rates.

It is offering fixed rate mortgages as low as 1.95pc, by far the lowest rate in the market, the Irish Independent has learned.

The company, which has bases in Carrick-on-Shannon and Dublin, is backed by Spain's Bankinter, a bank which has €93bn in assets.

Its entry here is set to be a big shock to the market as it will be the first sub-2pc lender in more than a decade.

Avant Money is aiming to sign up first-time buyers and movers, but is also set to make a very strong play to get switchers on board.

Applications will be open to borrowers who meet Central Bank lending limits and Avant Money's lending criteria.