Spanish bank takes over Avantcard - might enter Irish mortgage market?

Brendan Burgess

Brendan Burgess

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Interesting piece by Fiona Redden in today's Irish Times

Spanish bank moves into Irish market through Avantcard takeover
Bankinter offers 20-year mortgages at just 1.99% in Spain


Bankinter is set to become the first foreign owned bank to enter the Irish market since the financial crash, in a deal which could potentially pave the way for the Spanish bank to enter the Irish mortgage market as An Post searches for a new partner for its planned venture. The Madrid-headquartered bank has just cut rates on its 20 year fixed-rate mortgages to 1.99 per cent.


Now it has been suggested that with its new owner, AvantCard could be a potential partner for An Post’s proposed mortgage venture.




...


In a note on Thursday, Davy Stockbrokers said the acquisition of AvantCard could offer Bankinter a route into the Irish mortgage market, given its existing agreement with An Post for consumer lending and An Post’s intention to seek a partner to enter the mortgage market.


However, it downplayed the new venture’s pricing approach. The broker said that it continues to “struggle” with the mooted price point, “ given the loss experience in Ireland, the difficulties in accessing collateral and the resultant higher risk weighted assets in Ireland”.
 
It was rumored last week there was a foreign bank interested who could offer mortgages just under 2% fixed over a long number of years hope it happens,
I was hoping a German bank was coming in ,
 
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Brendan Burgess said:
. The Madrid-headquartered bank has just cut rates on its 20 year fixed-rate mortgages to 1.99 per cent.
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Just remember product bundling is a common feature in some countries.

To get this 1.99% rate, the bank requires you open a bank account (0.5%), take out home (0.1%) and life (0.6%) insurance and open a pension plan (0.1%). Percentages are the discounts for each from normal rate, which is over 3%.

Bankinter have a history of bundling, and pre-crash offered a small number of mortgages at a negative margin from ECB so ended up PAYING interest on mortgages.

there is an arrangement fee of 1%, with a minimum payment of €500 and cancellation fee of 0.5% in the first five years of the loan.
 
RedOnion said:
To get this 1.99% rate, the bank requires you open a bank account (0.5%), take out home (0.1%) and life (0.6%) insurance
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Hi Red

Are their bank charges very high? KBC requires you to open a bank account to get a 0.2% discount which covers the bank charges easily. So 0.5% of €200,000 would be €1,000 which should be attractive for most people.

.6% for a life policy also seems attractive assuming that their life policy is not much more expensive than the competitors.

If you fix for 20 years at 1.99% and, then later, want to switch banks, presumably your rate rises to 2.49%. If the life insurance premium is the same as in Ireland, it would be fixed for the term.

Brendan
 
Brendan Burgess said:
Are their bank charges very high?
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Actually, the opposite, so this one is a win-win for people who don't go overdrawn! They recently introduced a 'payroll account' where you can earn interest on credit balances up to a limit. I'm not sure if it works a bit like an offset mortgage, or if it's available even if you don't have a mortgage.

I'm not sure what their insurance premiums are like. But I guess their aim is that you've so many products with them, that they end up with all you business.
 
Translation from Google translate, but below is how APR is calculated. Looks like life assurance is renewable annually, so the premium would increase each year.

I don't fully understand why their APR is so much higher than quoted rate.


20-year Fixed Mortgage: The following is a representative example of a fixed-rate TAE mortgage loan offered by Bankinter SA, based on the characteristics indicated below:
Loan amount: € 150,000. Loan term: 20 years (240 monthly installments). APR: 2.92%. Monthly fee for 20 years: € 758.11. Last installment: € 759.55. Opening Commission: 1% with a minimum of € 500 (€ 1,500). Total interest: € 31,947.84. Interest rate: 1.99% (240 months). Monthly fees.
Interest rate conditioned on the contracting with Bankinter of the products indicated below:
- Payroll, Professional Account or Non-Payroll Account (Bonus of 0.50 percentage points).
- Life Insurance for 100% of the amount of the mortgage loan, contracted with Bankinter Seguros de Vida SA of Insurance and Reinsurance (Bonus of 0.60 percentage points).
- Multi-risk Home Insurance with coverage of a minimum of € 30,000 and a capital of continent equivalent to the appraisal value of the property for insurance purposes, contracted with Línea Directa Aseguradora, SA and under the intermediation of Bankinter SA, Banking Operator- Insurance (Bonus of 0.10 percentage points).
- Pension Plan / EPSV: Having a pension plan / EPSV with the Bankinter Seguros de Vida company, belonging to the Bankinter SA Group, and making a minimum annual contribution of € 600 (Bonus of 0.10 percentage points).
The hiring of such products as described is optional for the Client, increasing to the previous rate (1.99%) the 1.30% corresponding to each of the non-contracted products, so if none is met of the conditions, the interest rate will be 3.29% (APR of 4.02%) and the total amount owed 215,415.68 €. In calculating this APR, the costs of hiring a home insurance for the amount of € 100,000 of the continent and € 30,000 of content and estimated annual fee of € 343.97 were taken into account. Tax on Documented Legal Acts: € 1,349.89. Administrative expenses: € 431.97. Valuation: € 332.75. Life Insurance Premium: € 190.86. Annual renewable insurance for an amount of € 150,000 for 20 years for a 30-year-old man. These costs derived from the formalization of the contract in public deed, have been calculated under the assumption of a home valued at € 187,500.00 located in the Community of Madrid, may be different depending on the Autonomous Community where the house is located. Notarial expenses are not included, nor those corresponding to the previous sale for not intervening in the calculation of the APR.
Total amount owed: € 196,259.05.
These TAES have been calculated under the assumption that there is no cancellation, either partial or total, over the entire duration of the loan and may vary depending on the amount and term. The Annual Equivalent Rate (APR) does not include the expenses that the client / borrower would have to pay for the breach of any of its obligations under the contract or those that are borne by the Borrower in the acquisition of goods and services. The granting of the mortgage is subject to the approval of the request by Bankinter, SA The amount of the loan can not be more than 80% of the lesser of the two values: purchase value or appraised value of the home, and even 60% in second homes. In the event that the Client fails to comply with its obligations to the Bank, In addition to being able to lose the home, the responsibility of this and the rest of the intervening parties of the operation, will be extended to all present and future assets. Offer valid until October 10, 2018 or until the amount offered is reached (€ 25 million).
 
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