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Mortgages

Mortgage rate war likely as Avant Money launches in Ireland with lowest rate in market

Mortgage rate war likely as Avant Money launches in Ireland with lowest rate in market
Daragh Cassidy

Daragh Cassidy

Head Writer

New mortgage lender Avant Money has entered the Irish market with rates as low as 1.95%, heralding what's sure to be the start of a mortgage rate war.

A few weeks ago we told you about Avant Money’s plans to enter the Irish mortgage market with rates below 2%. The news was music to the ears of many mortgage holders in Ireland no doubt who have been stuck paying among the highest mortgage rates in the Eurozone for years. 

Well today Avant Money has finally launched with a fixed rate as low as 1.95%, hugely undercutting the current lenders and heralding what’s sure to be the start of a mortgage rate war here…

What's new?

Avant Money, which has been providing personal loans and credit cards under the Avant Card brand in Ireland for many years, and is owned by Spanish banking group Bankinter, has launched a suite of competitive fixed and variable rates, 

Fixed rates will start from just 1.95%, while variable rates will start from 2.50%. 

Figures from the Central Bank last week showed that Ireland currently has the third highest mortgage interest rates in the eurozone with an average rate of 2.82%, so these rates will hugely undercut what most people are currently being offered. 

However, as with all lenders, the rate you'll be offered will be based on the size of your deposit if you’re a first-time buyer and the level of equity you have in your home if you're looking to switch.

Those with bigger deposits and more equity will get the lower rates. 

What are Avant Money's new mortgage rates?

Fixed term

Loan-to-value ratio

Rate

Follow-on variable rate

3 years

<60%

1.95%

2.50%

60 - 70%

2.10%

2.50%

70 - 80%

2.20%

2.75%

>80%

2.35%

2.75%

5 years

<60%

1.95%

2.50%

60 - 70%

2.10%

2.50%

70 - 80%

2.20%

2.75%

>80%

2.50%

2.75%

7 years

<60%

1.95%

2.50%

60 - 70%

2.30%

2.50%

70 - 80%

2.40%

2.75%

>80%

2.65%

2.75%

The good news…..

The good news is that there is now more competition in the Irish mortgage market, which can only be a positive for consumers.  

Indeed, AIB has already responded by announcing cuts of up to 0.20% on all its fixed-rate mortgages, with the other main banks expected to follow suit. 

The not so good….

While the headline rate of 1.95% from Avant Money is certainly eye-catching and will capture all the headlines, it requires a deposit of at least 40% which will be vastly unachievable for most first-time buyers.

Most first-time buyers are only able to save a deposit of 10% or 20% max. 

The lowest rate available to buyers with a deposit of this size from Avant Money is 2.35%, which isn’t far off the rates already available at the moment. 

In fact first-time buyers can currently get a two-year fixed rate of 2.30% from both KBC and Ulster Bank while KBC also offers a 2.35% fixed rate over three years to first-time buyers.

Ulster Bank also offers €1,500 cashback on all its mortgages while KBC offers €1,500 cashback on its three, five and 10-year rates. 

So Avant Money certainly isn't offering any better value here. 

It’s also slightly disappointing that Avant Money is only offering a fixed rate of up to seven years. Fixed rates of up to 10 years are now on offer in Ireland from some lenders but fixed rates of over 20 years are on offer in the rest of the Eurozone. It would have been nice to have seen some more competition in this space. 

Avant Money also doesn’t offer cashback or reduced home insurance or any other types of offers. And while cashback has proven to be controversial, it can’t be denied that it’s been extremely popular with first-time buyers in Ireland who might use the funds to help pay back the ‘bank of mum and dad’ once they’ve gotten their mortgage or to help towards buying things like furniture once they’ve moved into their new home. 

No short-term gimmicks

Commenting on today's launch, Avant Money CEO Chris Paul said:

“We are confident that our products and rates will be appealing to Irish customers who have been under-served for far too long when it comes to their mortgages.

 “Unlike other providers, we have shunned short-term gimmicks such as cashback offers in favour of products and rates geared towards providing true, quantifiable savings over the life of a typical mortgage.”

Switchers

Where Avant Money offers excellent value is for switchers who bought their property around five to 10 years ago and who should have built up some substantial equity in their home and who can actually avail of the sub 2% rate.

However here switchers will need to be prepared to stump up the €1,000 to €1,500 mortgage switching costs upfront, which may be off putting for many mortgage holders despite the longer-term savings to be made. 

Most of the other lenders in Ireland pay cashback upfront to help towards the switching costs.

See here for more info on how to switch your mortgage.

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