Avant Launch Euribor Tracker

The new product will be set with a margin of 0.9pc over the Euribor rate, for those borrowing 80pc or less of the value of the property. A margin of 1.1pc will apply for those with a loan to value or 80pc or more.

The Euribor rate charged will be determined at mortgage drawdown and then annually based on the 12-month Euribor market rates prevailing on the anniversary of the mortgage.

The Euribor rate is published, offering transparency to Flex mortgage customers. One of the Euribor rates is currently 2.4pc.

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Be interesting to see if the so called "pillar banks" attempt to compete given the damage that ensued from their previous involvement.

Damage both to their reputation and significantly more importantly, damage to their customers.

If they do I'd say the T&C s would make for interesting reading.

Great to see the return if the tracker though.

So for an LTV <80%, the rate today would be euriobor 2.4% + 0.9% = 3.3%

The AIB variable rate is 3.95%
ptsb variable is 4.5%

The cheapest rate in the market is AIB Green 3 years at 3.1%.

So the Avant rate is clearly a Best Buy.

Brendan

I’m not sure if our banks are in to ‘best buys’ anymore.

These are common in Spain AFAIK where Avant’s owner is.

Is there any significance in the fact that trackers up to now tracked ECB (MRO?) rates whereas this uses a Euribor rate? It's the latter less volatile or something?

My understanding is that the Euribor rate has a closer relationship on what it costs a bank to borrow than the ECB refinance rate which is used for the legacy tracker products.

Hello,

The price promise, in terms of the fixed lending margin, is the big win for the consumer.

In times past, the big mistake that the Banks made wasn't offering the Tracker mortgage product itself, but offering it at too low a margin (they didn't price them correctly for their risk).

The fact that Avant have decided to price it off the (average) previous 12mth Euribor rate is interesting - it affords a level of stability for both consumer and lender.

How the Bank funds these loans is somewhat irrelevant - banks have traditionally matched long term lending, with a mix of short term deposits, interbank funding and retained profits - that won't really change, unless there's very cheap money on offer from the ECB, from time to time.

MrEarl said:

they didn't price them correctly for their risk).

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Both risk of default by customer and also the assumption that they could fund themselves at the MRO in perpetuity.

I had a colleague years ago who had a tracker with a 57bps margin. That’s the lowest I ever heard of.

Dr Strangelove said:

... a tracker with a 57bps margin. That’s the lowest I ever heard of.

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There was even lower.

MrEarl said:

The fact that Avant have decided to price it off the (average) previous 12mth Euribor rate is interesting - it affords a level of stability for both consumer and lender.

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The pricing transparency is very welcome indeed, compared to the one-sided, variable rate policies in operation.

So it's priced off the off the average, previous 12mth Euribor rate at drawdown and is effectively a rolling one year fixed rate with the benefits of a variable rate mortgage. There is good protection from interest rate shocks in that and will, somewhat, smooth the path for mortgage customers in a rising rate environment. I think that's a good product.

Dr Strangelove said:

I had a colleague years ago who had a tracker with a 57bps margin. That’s the lowest I ever heard of.

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I had an NIB / Danske LTV mortgage at ECB rate +0.50%.