# New mortgage lender to shake up market



## todo (5 Feb 2016)

http://www.independent.ie/business/...tgage-lender-to-shake-up-market-34425862.html


Hopefully some decent interest rates rather then the normal fleecing.


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## Brendan Burgess (5 Feb 2016)

Great news indeed. 

"It is understood the operation is funded from pension funds in Ireland and Europe."

This makes a lot of sense. AIB issued bonds recently at around 0.6%.   I presume Irish pension funds were buyers of these.

So an Irish worker puts money in their pension fund at 0.6%
Then they borrow it back at 3.55%

AIB gets a margin of 2.95% to facilitate a person to lend their own money to themselves. 

Crazy stuff. 

A pension funded mortgage provider might have different objectives to the profit maximising banks.

Brendan


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## gnf_ireland (5 Feb 2016)

Obviously this is fantastic news, and would be great for the fair mortgage rates campaign

@Brendan Burgess is it worth trying to arrange a meeting with Mr Cunningham in advance of its 'pending' launch and see if it would be possible to outline some of the main issues with the current lending practices and ask him to consider addressing some of them contractually in their mortgage agreements - e.g. treat existing & new customers fairly and set a maximum cap the mortgage rate in the event they go out of business etc (or maybe in general)


It will also be interesting to see if they offer incentives to switch (legal contribution) or cashback offers (with clawback)

I will definitely be interested in switching again, but would be good to see what their mortgage agreement states on commitments to the customer (once bitten and all of that)


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## gnf_ireland (5 Feb 2016)

It would also be good to know if they support the re-drawdown for overpayments KBC currently do, and even the payment holiday for overpayments PTSB does. 

These are things that they could compete on easily enough without a financial impact to them.

Surely banks should be encouraging overpayments where possible !


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## Clonback (5 Feb 2016)

I welcome the arrival of  Frank and provided they offer a variable rate c.2.7% I will switch immediately.Jumping through a few hoops to save .75% makes it work for me.Hopefully the C.B. issues approval quickly.


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## Cervelo (5 Feb 2016)

Clonback said:


> I welcome the arrival of  Frank and provided they offer a variable rate c.2.7% I will switch immediately.Jumping through a few hoops to save .75% makes it work for me.Hopefully the C.B. issues approval quickly.



Can I ask why you think they would offer a c2.7% rate, all they have to be is be slightly cheaper then the cheapest rate available


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## Sarenco (5 Feb 2016)

gnf_ireland said:


> Surely banks should be encouraging overpayments where possible !



Why do you say that?


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## Black_Adder (5 Feb 2016)

I note that the Independent article mentions Northview (aka Kensington Morgages) as another potential entrant. Essentially a sub-prime lender and I am not sure that they would be at all interested in competitive rates (as defined as sub 3%).


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## WorstPigeon (6 Feb 2016)

Cervelo said:


> Can I ask why you think they would offer a c2.7% rate, all they have to be is be slightly cheaper then the cheapest rate available



Not the person you were replying to, but if they offer rate just slightly better than the current best deals, they'll get some customers, but those offering the current best deals may come down a bit to meet them. If they offer a really good rate but are picky about who they accept, though, they could grab a large number of high quality, low risk loans.

2.7% seems kind of optimistic, granted.


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## inaquandert (6 Feb 2016)

This would be great - I hope it's true


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## Brendan Burgess (6 Feb 2016)

gnf_ireland said:


> @Brendan Burgess is it worth trying to arrange a meeting with Mr Cunningham in advance of its 'pending' launch and see if it would be possible to outline some of the main issues with the current lending practices and ask him to consider addressing some of them contractually in their mortgage agreements



I understand from the article that he is not commenting at the moment.  They are waiting for approval from the Central Bank and I guess that they don't want to jump the gun.

I have copied this to a new thread: 

* What features would a fair mortgage have?*


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## gnf_ireland (10 Feb 2016)

Sarenco said:


> Why do you say that?



While I fully understand the banks make money on the interest charged, and the lower the principal the less interest being charged, I also assume that the main-stream banks would prefer to have higher quality loan assets on their accounts. Surely overpaying, and the ability to regularly overpay, increases the quality of the asset, and therefore is less risky.

The bank is in effect getting a higher return for a less risky asset via overpayment - but then again we may all have different views on this.

I personally believe that the mortgage rate you are on should reflect the LTV you signed up on, and should not move during the lifetime of your mortgage unless you switch providers. But I know others believe differently on this point.


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## Brendan Burgess (10 Feb 2016)

gnf_ireland said:


> I also assume that the main-stream banks would prefer to have higher quality loan assets on their accounts. Surely overpaying, and the ability to regularly overpay, increases the quality of the asset, and therefore is less risky.



Less risky, but a lot less profitable. 

Bank of Ireland is better off getting 4.5% on a mortgage of €300k on a house worth €500k, than getting 4.5% on a mortgage of €100k on a house worth €500k

Of course, BoI would far prefer a mortgage of €100k on a house worth €200k, than a mortgage of €300k on a house worth €200k.,

Overpayment only suits the bank when the loan is a cheap tracker or where the house is in negative equity.

If the borrower can withdraw the overpayment, I am not sure if it suits the bank that much if the loan is in negative equity.

Brendan


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## Lightning (14 Feb 2016)

The Frank Mortgage have a [broken link removed]. Albeit, not all information is on the site yet.

Website says they are still waiting for CBI approval.

One can register for updates.


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## newirishman (15 Feb 2016)

CiaranT said:


> The Frank Mortgage have a [broken link removed]. Albeit, not all information is on the site yet.
> 
> Website says they are still waiting for CBI approval.
> 
> One can register for updates.



"Not all information" is an understatement. There's literally no useful information at all available at this point. 
Anyways, registered for updates so let's see.


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## Lightning (15 Feb 2016)

The website is clearly in an early stage of development.


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## gnf_ireland (5 Apr 2016)

Anyone got any more details on this yet? Would be interesting to hear any insider knowledge people may have


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## Brendan Burgess (23 Apr 2016)

Charlie Weston has an article on it in today's Indo 

*New lender aiming to undercut banks on mortgage rates*

"Frank Money is aiming to have mortgage rates of 2.8pc - some 0.5pc lower than the best variable rates offered by the banks.

The new lender is awaiting approval from the Central Bank to enter the mortgage market, and will be targeting switchers and new borrowers once it gets authorisation.

...

There is some frustration among brokers that it is taking the Central Bank months to approve Frank Money's application to become an authorised mortgage lender.

This is despite Central Bank Governor Philip Lane blaming a lack of competition in the home-loans market for the fact that variable rates in this country are the highest in the eurozone."

Does Frank not realise that the last thing which the Central Bank really wants is competition driving down prices? The Central Bank wants the banks to continue fleecing mortgage holders so that they build up their profits and capital. 

Brendan


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## Sarenco (23 Apr 2016)

It's a pity there is no comment or reaction on behalf of Frank Money in the piece.  Beyond guessing, we are really none the wiser as to the real position.


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## newirishman (24 Apr 2016)

Brendan Burgess said:


> There is some frustration among brokers that it is taking the Central Bank months to approve Frank Money's application to become an authorised mortgage lender.
> 
> This is despite Central Bank Governor Philip Lane blaming a lack of competition in the home-loans market for the fact that variable rates in this country are the highest in the eurozone."
> 
> ...



Is this you guessing or do you have some background information available?

According to the CRO, the [broken link removed] was registered on Dec 19, 2015 so lets assume that within a week or so they would have submitted the license application.
The Central bank process is described here: [broken link removed]

The relevant SLA's seem to total up to a max of 100 business days (10+90) - which is just under 5 calendar months - if there aren't any questions with the application. One would expect that there is a bit of back-and-forth if it is a new entrant to the market.

Whilst there doesn't seem to be too much of a rush with it, I don't see anyone purposefully delaying it either.


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## Jon Stark (20 Jul 2016)

Nothing seems to have changed on Frank's website in the last few months - has there been any updates (I didn't register to receive them )


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## Sarenco (24 Oct 2016)

Niall Brady had an article in this weekend's Sunday Times to the effect that Frank Money are hoping to offer mortgages in the new year.

Here's hoping...

http://www.thetimes.co.uk/edition/ireland/mortgages-to-bypass-the-banks-bc6rr00bx


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## long_boy (2 Dec 2016)

Any updates on this? I've been holding on a waiting like others. In the meantime KBC are now offering me 3.0% vs the 3.3% I pay EBS so could make significant savings and tempted to switch. It's almost the 'New Year' now.....or will this drag on for another 6-12 months I wonder?


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## kaisersoze81 (2 Dec 2016)

Wondering this also. About to sign a 1 year fixed at 2.9% with kbc but if frank were to be offering 2.8% I'd rather switch and give them my money than kbc


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## Brendan Burgess (3 Dec 2016)

The last I heard was that the Central Bank seemed to be happy enough - it took them a year to become happy to approve a lender who wanted to cut mortgage rates. I am not sure if this "happy enough" means that they have granted official approval. 

The issue now is whether the business model is still viable .  They would have been able to offer a lower mortgage rate and get a small share of the market and still be profitable.  With rates cut generally in the last year and Irish consumers virtually refusing to switch to cheaper lenders, it may no longer be a viable business model.  Or more correctly, it would take longer to become viable. 

Brendan


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## MrEarl (4 Dec 2016)

Brendan Burgess said:


> .... Irish consumers virtually refusing to switch to cheaper lenders....



Will we ever learn ? ... its the same old story every time, moan about the cost of financial services, then don't do anything about it when options present themselves (either from existing or new entrants to the market).

Getting back to Frank Money, I was very interested in the concept and felt that if they had launched quickly and successfully, there might be others that would follow with a similar business model.  I think there could be an opportunity to follow this model and lend into the commercial property market, where lending rates are less competitive.  Sure, some commerical property expertise is required, but I would have thought that was reasonably easy to sort out.


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## Dauhee (4 Dec 2016)

I have become one of those under the title "inertia". A couple of years ago, I was able to get a mortgage very (very) easily. Now, even though on higher income, I am unable to switch due to the fact that I married and my wife's financials are pulled into relevancy. Regardless of the fact financially could pay for a second mortgage comfortably, we now do not meet banks lending criteria. Now I'm starting to question is there really that much inertia, or have peoples circumstances changed, precluding them from switching. Anything from:

newly adopted bad financial handling (having a little bet, late paying credit card etc)
getting married
having children
forced wage cut
increased costs - higher running costs for home/car/older children/college etc
loss of job/newly changed job/gone contracting/self employed
So now I am at the complete mercy of my mortgage provider. They can choose to do what they want with their rate, and I have to go along for the ride


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## MrEarl (5 Dec 2016)

Hello Dauhee,

If you have maintained a perfect repayment record, then perhaps you can get a competitor bank to consider your application as an exception to the CB rules (they are permitted a small percentage of exceptions, as I understand it).  Have you considered this approach ?



Dauhee said:


> I have become one of those under the title "inertia". ....



While I appreciate the various points you make, with regards to your own circumstances... I was actually referring to the population at large, we saw something similar ten years ago when there were other banks offering a range of retail products (i.e. Danske, ACC, Halifax Bank of Scotland etc.) and they were unable to attract in significant customers, despite offering very competitively priced services.

I've come to the conclusion that it's an Irish thing (whether it's about finances, politics, retail prices for imported goods, public services etc.) we like to have a good moan in the pub, but then do nothing other than look forward to complaining further about the same thing time and time again....kinda makes you think we deserve a lot of what we get


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## Dauhee (5 Dec 2016)

Thanks MrEarl, but its a lost cause for me currently. It has opened my eyes however, as there may not be as many "lazy" customers as thought


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## gnf_ireland (5 Dec 2016)

Dauhee said:


> It has opened my eyes however, as there may not be as many "lazy" customers as thought


@Dauhee  I have raised this previously as well in other threads, although I did not include the 'married into trouble' as one of them. I had the childcare one included, which to me is the big one whether it be creche or college ! Also the obvious negative equity and pay cuts included.

So yes, I agree that there are a portion of customer who cannot move, as opposed to will not move. My personal view is these are the people who should be protected via the FF legislation. Those who can move should, and therefore create a level of competition around rates. This only works of course if customers have their eyes open when dealing with banks and ensure rate cuts are passed onto them

For those who cannot switch, the advise is to move to the best possible product with the bank you are with, until you get to a point where you can switch and then vote with your feet.


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## gnf_ireland (5 Dec 2016)

MrEarl said:


> I was actually referring to the population at large, we saw something similar ten years ago when there were other banks offering a range of retail products (i.e. Danske, ACC, Halifax Bank of Scotland etc.) and they were unable to attract in significant customers, despite offering very competitively priced services.



Absolutely agree with this statement as a generalisation. I believe there is research in the UK which states a person is more likely to divorce than change their banks - and although the divorce rate is much lower here, I would say the same applies.

I think those on AAM are the exception to the rule generally, as they are aware enough of their finances to be on the site in the first instance. I think a high level financial review on the vast majority of the population would be a scary result


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## Sarenco (8 Mar 2017)

The Financial Times is reporting this morning that The Frank Mortgage has raised €200m from several of the country’s pension funds and will begin lending once it has raised €250m.  Maybe this is going to happen after all...


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## AlbacoreA (8 Mar 2017)

I think they will enter just as rates rise.


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## Lightning (8 Mar 2017)

Sarenco said:


> The Financial Times is reporting this morning that The Frank Mortgage has raised €200m from several of the country’s pension funds and will begin lending once it has raised €250m.  Maybe this is going to happen after all...



Thanks for the update. The FT article is here. No mention as to whether Frank have got CBI approval yet or not.

Interesting stat in the FT article about the Dutch mortgage market ... "The company hopes to follow a trail blazed in the €660bn Dutch mortgage market, where a host of nonbank lenders backed by insurers and pension funds have provided nearly a fifth of new lending in recent years, up from almost nothing."


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## Sarenco (8 Mar 2017)

CiaranT said:


> No mention as to whether Frank have got CBI approval yet or not.



I just checked the relevant Central Bank Register and I can't see any sign of an authorisation having issued to Frank.


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## Brendan Burgess (8 Mar 2017)

CiaranT said:


> No mention as to whether Frank have got CBI approval yet or not.



I don't know the answer to this, but I gather that they have satisfied the Central Bank.  They are no longer the cause of the delay.  

They probably won't issue the formal license until the €250m target has been raised.

Brendan


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## MrEarl (10 Mar 2017)

gnf_ireland said:


> Absolutely agree with this statement as a generalisation. I believe there is research in the UK which states a person is more likely to divorce than change their banks - and although the divorce rate is much lower here, I would say the same applies.
> 
> I think those on AAM are the exception to the rule generally, as they are aware enough of their finances to be on the site in the first instance. I think a high level financial review on the vast majority of the population would be a scary result



All we can do, is continue to spread the good word


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## WorstPigeon (10 Mar 2017)

gnf_ireland said:


> Absolutely agree with this statement as a generalisation. I believe there is research in the UK which states a person is more likely to divorce than change their banks - and although the divorce rate is much lower here, I would say the same applies.
> 
> I think those on AAM are the exception to the rule generally, as they are aware enough of their finances to be on the site in the first instance. I think a high level financial review on the vast majority of the population would be a scary result



That may possibly be because for many there's not that much point; the Irish banking landscape is not very competitive, and unless you're on a BOI SVR or something, savings from switching are going to be pretty small, and may not compensate for the effort involved. If Frank actually deliberately pitched a substantially lower rate than AIB et al, and cherry-picked customers unlikely to default, then I'm sure they'd get lots of switchers. 2.5% would be mediocre by EU standards but great by Irish standards, say; if they pick a customer profile which is likely to pay back the loan reliably, they'd still be doing better on that rate than lending elsewhere in the EU, and they'd have no trouble finding customers.


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## Dauhee (14 Mar 2017)

Seems the tide is turning with rates in UK. http://www.telegraph.co.uk/personal-banking/mortgages/four-reasons-lock-cheap-fixed-mortgage-today/

Although HSBC still offering 2 year fixed of 1.14% . . . . . Am guessing Frank will be a little off that if it materializes this year


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## ronaldo (16 Mar 2017)

Dauhee said:


> Seems the tide is turning with rates in UK. http://www.telegraph.co.uk/personal-banking/mortgages/four-reasons-lock-cheap-fixed-mortgage-today/



I'd take articles like that with a pinch of salt. Whilst it's guaranteed that rates will start trending upwards at some point, articles such as the one above have been regularly appearing in the UK media for many years.


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