Losing two banks at a time when the European Central Bank is starting to hike rates will be tough on mortgage holders. Photograph: iStockCompetition or the potential lack of it in the Irish mortgage market has been a hot topic of discussion over the last 18 months since the announcements by Ulster Bank and KBC Bank that they were planning to exit the Irish market.
Switching levels have also exploded as existing mortgage holders rushed to access the historically low rates on offer in advance of any changes to European Central Bank rates. Non-bank lenders are funded through the markets, which leaves them more exposed to rising market rates. They have already moved. ICS/Dilosk announced tight restrictions on lending until financial markets normalise and last week increased variable rates. Avant Money, which has offered the lowest rates in the market since its launch in 2020, raised its main fixed rates by between 0.3 and 0.7 of a percentage point.
Considering the high-profile exits from the market, it is critical that the non-bank lenders continue to thrive. The commitment from Bank of Ireland to provide €1 billion in funding to non-bank lenders as part of the Competition and Consumer Protection Commission approval to acquire KBC will help.
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