Finance Ireland, the State's largest non-bank retail lender, has launched a series of residential mortgage products in a bid to compete with the main banks.
The company will operate an interest rate policy that offers better rates to customers if there are drops in their loan-to-value (LTV), or the ratio of their borrowings to the market value of their property. LTVs fall over time in a rising property market or if borrowers pay off their loans at a faster pace than any drop in prices.
Finance Ireland said customers may be able to access lower interest rates once they provided a new property valuation from its panel of approved valuers and that they could do this at different times throughout the life of a loan.
It also said it would contact mortgage customers annually regarding lower variable interest rates if their LTV improves. It described this as a “lifetime value” approach.
Variable rates start at 2.75 per cent for borrowers with a loan-to-value of less than 50 per cent. This rises to 2.95 per cent for borrowers with an LTV of 50-80 per cent and 3.15 per cent for borrowers with an LTV of 80-90 per cent.
The company also offers fixed rates over three-year, five-year and seven-year periods. Loans of a maximum of €1.5 million will be advanced over terms of up to 35 years, it said.
Limits
It also indicated that it may on occasion offer first-time buyers LTVs higher than 90 per cent and movers LTVs that are higher than 80 per cent, subject to the Central Bank’s limits on the freedom of lenders to do so.
Finance Ireland, led by former Irish Permanent chief executive Billy Kane, first entered the mortgage market late last year when it acquired Pepper Money's €200 million home loans portfolio and platform.
It plans to distribute its expanded range of mortgages, which are aimed at the main residential market, through regulated mortgage intermediaries.
Finance Ireland is already involved in car finance, commercial property, agri-finance and small business loans. Its mortgage business is being funded by UK asset manager M&G Investments.
The lender, established in 2002 and headquartered in Ballsbridge, Dublin, employs 140 people.
‘Substantial business’
Mr Kane said Finance Ireland was now a “substantial business” challenging the main banks across a number of sectors, including the residential mortgage market where he said there had been “too little competition for too long”.
“We are delighted with the response we have received to date since entering the market only a few short months ago,” he said.
Mr Kane added that the company would make the most of its start-up position in the market.
“All our credit decisions are taken under one roof locally,” he said. “Our emphasis is on fair pricing over the long term and, unlike some players in the market, we offer the same pricing to new and existing customers.”
