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Mortgages

Avant Money to enter Irish mortgage market with rates below 2%

Avant Money to enter Irish mortgage market with rates below 2%
Rob Flynn

Rob Flynn

Staff Writer

Avant Money is the first non-Irish lender to enter the market here since Halifax (Bank of Scotland), and will inject much needed competition into the market for Irish consumers.

The mortgage journey can be a long and winding road to say the least, and it certainly wasn’t made any easier for those planning to buy for the first time with the arrival of a global pandemic early in the year.

Already struggling mortgage holders were forced, in many cases, to avail of payment breaks on their mortgages, with mortgage lending seeing a considerable drop-off too.

However, some positive signs have emerged along the road for switchers, movers and first-time buyers alike with the news that Avantcard, trading under the newer name of Avant Money, is planning to enter the Irish mortgage market, and with rates at half the price currently available here.

Who is Avant Money?

Avant Money is the new trading name which consumer finance company Avantcard will use to offer mortgage products to Irish customers.

Avantcard is based in Leitrim and specialises in credit cards and personal loans. It has offices in Carrick-On-Shannon and Dublin.

The business was originally established by credit card company MBNA over 20 years ago and was successfully acquired by American private equity fund Apollo in 2012 when MBNA pulled out of the market here. It was at this point the business begun offering a 'broader range of financing options' with personal loan products and subsequently rebranded to Avantcard in 2013.

The business is now owned by one of the largest banks in Spain, Bankinter, who acquired the company in June of 2019. Bankinter, has already accrued vast experience in the world of mortgages with a substantial mortgage business stretching over Spain and Portugal, even providing financial solutions in Luxembourg.

What’s happening?

This autumn Avant Money is set to begin offering a number of new mortgage products to Irish consumers.

As part of its new plans, Avant Money is set to offer fixed rates under 2% to new customers, massively undercutting the opposition and providing much needed competition in the sector.

This new venture from Avant Money couldn’t have come at a better time for Irish consumers who are paying an average rate of 2.87% on new mortgages. And while rates have come down slightly in recent years they’re still roughly double what they are on average in the rest of the Eurozone.

The new mortgage offering from Avant Money will be available to customers through the broker market. The company is in negotiations with a number of specialist and well-established brokers who consumers can engage with in the coming months.

The new rates will be available to all new customers, including those switching, as well as first-time buyers. 

Customers can expect more information about the new rates to be communicated by Avant Money in the coming weeks, including repayment terms and which brokers the rates will be available through.

Chris Paul, CEO of Avantcard said of the news:

"Over the years, we have seen how Irish consumers have been under-served in comparison to their European counterparts and it's time for that to change.

"Supported by our parent, Bankinter, and building on our strong consumer finance legacy, we are confident that we will be able to provide markedly better value for customers and deliver genuine, long-lasting change.”

Possible rate war

Irish consumers finally have something to look forward to when it comes to the mortgage market here, a key component that has been absent for some time - increased competition.

Avant Money entering the market, with its soon to be leading interest rates, will hopefully be the spark that finally gives Irish consumers some well-needed choice and value over the course of their mortgage.

A lot of Irish banks are still struggling from weak profitability as a result of the Celtic Tiger property crash, having been required to set aside far more capital than banks in Europe, which is one of the many reasons consumers haven’t seen much change in mortgage prices here. This crucially won't apply to Avant Money.

However, with Avant Money set to disrupt the market by offering rates below 2%, the more traditional lenders such as AIB and BOI may have no other choice but to innovate, so there’s a lot to look forward to.

There had been a lot of talk in recent months about An Post entering the mortgage market by teaming up with a big foreign lender, so Avant Money has taken many surprise with this announcement and getting in there first.

In fact, some lenders have already begun to make moves in the space with Permanent TSB announcing a cut to its variable and fixed rates at the same time news about Avant Money was made public.

The bank will reduce its standard variable rate by 0.55%, its managed variable rates from between 0.10% and 0.30%, not to mention a reduction in its fixed rates to as low as 2.95%.

The changes from the bank are set to come into effect between August 4th and early September.

Interestingly, Avant Money has decided to choose “specialist mortgage intermediaries as their primary distribution channel”.

Trevor Grant, Chairperson of the Association of Irish Mortgage Advisors (AIMA) said:

“Currently 3 out of 10 consumers use the services of a specialist mortgage intermediaries when applying for a mortgage, and we expect this to grow exponentially in the coming years. This is mainly due to the fact that these intermediaries can provide greater product choice across the board, as well as often being able to offer better rates that are exclusively available through this channel.”

With the imminent entry of Avant Money into the market, it’s rather inevitable that embattled banks will have to begin to prepare for an all-out rate war, much to the delight of hard-pressed switchers and first-time buyers around the country.

However, it remains to be seen how easy it will be for mortgage holders to get these eye-catching rates with some questions yet to be answered, namely, will they only apply to higher value mortgages and what size deposit will people need?

With this market-changing move will Irish mortgage holders finally see some real value like our European counterparts? Only time will tell...

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