Finance Ireland - possible new entrant to residential mortgage market?

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newirishman

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Another “Frank Mortgage”? Unless I see an actual available offer this is all just more hot air and waffle.

Why would any new lender want to enter the market? Interest rates - in order to be in some way competitive - need to be sub 2 per cent. Which means returns for investor will be sub 1.5.
Given the risk profile, who cares - so there won’t be a lot of money available.

Which means at the most some niche market, which again nobody gives a damn about.
 

Dauhee

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"As a small player it will struggle to compete on price, but Billy Kane said borrowers in the first time-buyer market currently have few alternatives and could benefit from greater choice"

will be a follower, not a leader
 

gnf_ireland

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"As a small player it will struggle to compete on price, but Billy Kane said borrowers in the first time-buyer market currently have few alternatives and could benefit from greater choice"
will be a follower, not a leader
It all depends on how they do this. There are ways to compete without necessarily doing so on price. They can be a price follower (i.e. in line with existing pricing) and still be an innovation leader - for example they could bring in lifetime fixed mortgages (say up to 15-20 years), could bring in an offset capability for over-payments allowing redraw facility (even if capped), could allow a 10 payment mortgage per annum (give July & December off), guarantor mortgages for the first 5 years or until LTV<80%, mortgages linked to pension contributions (or guaranteed against them in some way), charging 0% for the first 2 years of a 5 year fixed term with potential break penalty, charging discounted rates for low LTI ratios etc etc.

Whether everyone agrees with the ideas or not, we cannot under estimate the power that cashback has had on the mortgage industry in Ireland over the last while. It has made it clear that to grow a market share, it does not necessarily mean competing on price alone !
 

Dauhee

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The cashback does compete on price. Being lazy here and not posting link, but I believe somebody here worked out that the BOI offering (as of last year) is effectively < 2.5% rate taking into account cashback.

I don't believe a small player (loan book) would have the appetite to jump into >10 year fixed rates considering rates are expected to rise over the next couple of years.

From what they have stated, their niche may be for first time buyers, some product in that space. . . . . . . Where peppers spot is crap rates for crap credit rating
 

MrEarl

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Hello,

I am seriously struggling to believe that a final decision has not been made by Finance Ireland ... more likely, there has been some unforeseen delay, so Billy Kane is trying to play it safe by pretending that no final decision has been made.

It's not high value business, but providing homeloans is relatively low risk in banking terms, and there seems to be plenty of international capital available to fund such a venture. Putting a product onto the market through the broker channel is not particularly challenging, it just needs to be relatively competitive and pay a reasonable commission, and there will be take up. It could quickly help grow the Finance Ireland customer base, which increases the awareness of Finance Ireland (possibly useful, if the intention still remains to float the business in the future) and could also bring potential for cross sales in the medium to long term.
 
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The Sunday Times have an update on Finance Ireland here (free registration required to read). Finance Ireland will enter the market over the coming weeks.

Finance Ireland, a non-bank lender backed by the Ireland Strategic Investment Fund (Isif), has decided to enter the mortgage market and will announce its plans within weeks.
Finance Ireland’s mortgages “will be competitive but not necessarily leading in terms of price”, Kane added. Finance Ireland will lend only to borrowers with prime credit records.
It will compete in all segments of the mortgage market including first-time buyers, those trading up or down, and switchers.
Finance Ireland and Dilosk plan to distribute their mortgages through independent brokers, who control 20%-25% of the mortgage market.
 

Brendan Burgess

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Very interesting. But why would anyone borrow from them if they are leading in terms of price?

Unless they offer long term fixed rate loans at lowish prices.

Brendan
 
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