Irish Mortgage Brokers Blog

I was interested in the front page of today’s Independent in which Charlie Weston broke a really big story about Irish banks being in advanced stages of designing ‘Negative Equity Mortgages’ (this is vastly different than the Negative Equity Loan/Short Sale Loan we have discussed previously). Essentially the bank will allow an individual to carry negative equity out of one property and move that onto another one within certain parameters.

This practice has already existed in the UK and is offered by Nationwide, Coventry and RBS, the schemes have not proved to be very popular, in part because of the stringent underwriting required. It is one thing for a client to fall into negative equity but another to actually facilitate them in compounding that fact and taking a further bet on their ability to repay. What do I mean by that?

First Loan: €200,000
Value: €150,000
Neg/Eq: €50,000

Then the €50,000 shortfall is passed into a second loan of (for example) €200,000 (which by nature will essentially be a 100% mortgage) and now they owe €250,000 with €50,000 negative equity in place the day they close.

In this case the borrower now owes more but they have a different property which they are more happy with and underwriting will ensure that they can still service the loan, but how many people will be willing to take up such a product? And who will the bank be willing to lend to on this basis? Credit is already tight, to trust a person with yet more money and negative equity in advance is a gamble, this beast is the evil love child of 100% mortgages - the very brand of lending that was a factor in the property bubble.

The sole saving grace is that people won’t opt for it, in the UK the uptake has been incredibly low, it is a niche product with little in the way of demand, it will help the people who are happy to use it and will be of little use to the average borrower, having said that, the Regulator recently said that banks have failed to learn their lessons from the crisis and that they don’t lend enough to business and rely to heavily on property, if this is the latest in financial innovation can we truly say they are learning anything at all?

In the first quarter of 2010 there were c. 62 business days, and from this time frame we have gotten the most recent lending figures from the Irish Bankers Federation on mortgages in Ireland. Those figures stated that there were 6,954 mortgages drawn down in the first quarter of 2010 equating to €1.22bn in lending.

Those are the hard facts.

Then come the contradictions. AIB claim to have about 40% of the mortgage market - that headline is from last November but we can assume it should still remain at above 30%, an institutional contraction of 25% would be known because it would definitely make headlines (the 40% of the market AIB has is 100% to them so if it fell to 30% that would be a 25% reduction on their single institution figures). Back on topic - if we accept that AIB is holding at least 30% of the market then that means they were responsible for 2,086 mortgages.

EBS are saying they have about 28% of the market, up from 21% last year. The bit I like best is where they say that one in two people who go direct to a bank for a mortgage went to EBS. Sadly, this doesn’t factor in the reality on the ground - every broker in town has a back door with the EBS via one of their agent branches and clients are regularly sent to them for loans when their more conservative broker wing won’t do the mortgage [EBS are loose on policy when you go direct].  A 28% market share would mean EBS were responsible for 1,947 mortgages.

We didn’t find statements of market share from the other banks, but I think it would be fair to say that between PTsb, Ulsterbank, NIB, INBS and KBC that they were jointly responsible for perhaps 15% of the market? (1,043 mortgages).

So we are now looking at a picture like this: AIB 2086 mortgages + EBS 1947 mortgages + everybody except BOI 1,043 mortgages = 5,076 mortgages

Nothing spectacular there until you get back to the fact that we had about 62 banking days in the first quarter of 2010, because during that time Bank of Ireland were claiming they were doing 100 mortgages a day. That would equate to 6,200 mortgages.

BOI figures 6,200 + everybody else’s figures of 5,076 = 11,276 mortgages

Reality = 6,954 mortgages.

Difference between the two? About 4,322 mortgages or in the region of €870,000,000 in lending.

In a nutshell, somebody somewhere is telling porkies. Who even cares any more.

PTsb have been fairly honest in the way they have handled their loan book over the last two years, unpopular too, however it is important to look at what they are doing, why they did it and what they will do next.

Their first mortgage rate increase came in July 2009 and it was an additional 0.5% on top of the existing variable rate mortgage. The second PTsb rate hike came at the end of January 2010 and was effective from the 1st of February 2010.

PTsb are not part of NAMA, they are benefiting by the guarantee (as are the likes of Postbank) but they are paying for that guarantee - and the only way they can continue operations without requiring an outright bailout is to increase rates, shrink their loan book and reduce costs. In that respect they are to be admired, they are doing what is necessary to remain a going concern.

The trend to watch for however, is that they will continue to increase rates, and their fixed rate offering will remain high, their ideal situation is to ramp up assets and because of that you’ll probably see the conservative rate suite (5 & 10yr fixed rates) on very low LTV’s (<50%) coming in at market leading rates, that is part of the game plan, you can shrink your loan book (ratio’s not absolute terms) by attracting low LTV biz and this is precisely what PTsb plan to do.

Irish banks are caught in a perfect storm of funding costs versus lending costs which spells bad value for consumers. This is clearly seen on the deposit and lending fronts, our banks can’t offer headline rates on deposits, nor can they charge sufficiently on lending. This is creating a multi-billion Euro dilemma which will ultimately be paid for by an already unfairly burdened taxpayer.

On the deposit side foreign banks can afford to pay far more than Irish institutions meaning they can hoover up deposits rapidly and with relative ease, on the lending side, Irish banks are unable to obtain the margin they need in order to compete and remain profitable.

When it comes to leading rates for indigenous lenders you will see that Anglo, despite being nationalised and having the inherent backing of the state on all deposits, is paying the highest rates for an Irish institution on  6 month (it is the best of the Irish institutions) and 1yr deposits (it is the best across the board on 1yr deposits) - this is well above the odds they should have to pay to attract deposits given the state backing, but it is also evidence of how badly regarded the failed bank has become [the nearest rate for a non-nationalised bank on 6mth Ptsb 1.5% and on 1yr Ptsb 3.1%].

The ongoing Banking Guarantee and the ensuing ‘equitable liability guarantee’ is costing the nation via the prices we pay for debt and the embedded cost to our banking system. Banks will pass on charges accordingly, but even with the protection the guarantee brings, the foreign institutions can still outstrip our banks on deposits, while our banks are charging less on mortgages!

This is putting the very banking system into a perfect storm whereby our indigenous players cannot make margin on loans which are increasingly defaulting, and at the same time they are unable to attract deposit business at leading rates because other institutions are out bidding them.

Foreign deposit only banks have several key advantages, they don’t operate branches in the country, this means they don’t have to spend huge money on the payments system the way branches do, they can then lend the deposited funds in any jurisdiction they want, and often they do so by charging rates that relate to the cost of funds, while Irish banks are left with negative margin products and a raft of non-performance. The foreign banks can thus attract capital by raising it here with low overheads and then lending it elsewhere (for instance in the UK or mainland Europe) at higher prices than they would achieve in the Irish market.

This issue is at the very heart of the survival of our banking system, lenders will need to find a way to gain margin by raising prices, drop down deposit rates, and shed staff in order to save money.

The first choice has limited scope as there are so many tracker mortgages out there, the weight of change will fall disproportionately on variable rate mortgage holders, this process has already started. The second choice will be nigh impossible, they can’t drop deposit rates or it compounds the issue they already have of not being able to attract capital (thus the state is going to play a vital role in saving our banks). The third choice of firing staff is unpalatable, but it will come in time as the sector adjusts, the question is - what do they do in the meantime?

Primetime took a look at the mortgage market situation in Ireland on the 2nd of February, they spoke to various industry experts as well as people on the street about their feelings on the situation. The clips below are well worth watching.

In this clip Primetime spoke to people on the street, and the general opinion was one of empathy for borrowers in trouble but the overall tone was that people didn’t necessarily want to step in and have their tax money going to bail them out. Then David Murphy interviews an anonymous borrower who is in debt trouble, as well as getting the opinion of Irish Mortgage Brokers Operations Manager Karl Deeter and Paul Joyce of the Free Legal Aid Centre (FLAC).

In the second video Pat Farrell of the IBF (Irish Bankers Federation), Stephen Kinsella (Lecturer of economics at University Limerick, and author of ‘Ireland in 2050), Pauline Blackwell of FLAC (free legal advice centre) and Ciaran Cuffe of the Green Party talk to Miriam O’Callaghan about the issues of debt and the solutions for solving impaired mortgages.

The third clip looks at the effects of interest rates as well as the PTsb decision to increase their interest rates, featuring David Guinane of PTsb talking to an Oireachtas Committee. Charlie Weston of the Irish Independent newspaper (personal finance editor) also features.

When making a mortgage application this is a question that many first time buyers want to know, how much money do I must I have for a deposit? Well, that kind of depends on which bank provides the mortgage finance!

Lending criteria is different for every bank/building society/lender, this goes for rates, the general underwriting criteria as well as the ‘loan to value‘, the deposit you need is 100% minus the Maximum LTV and that will give you the deposit amount you require.
For instance, ICS have a maximum LTV of 92% so the deposit you need - if you are obtaining finance through them - is 100% - 92% = 8%.

What is interesting in that example is that when you go ’sale agreed’ on a property the estate agent will ask for a security deposit and the balance of 10% at the signing of contracts, this is an example of industry lingo being so embedded that it becomes separate to reality. The fact is that if you obtain 92% finance that you don’t need to give a security deposit plus the balance of 10% at the signing of contracts, it would be the balance of 8% - your solicitor will talk to the other side and organise this.

The mortgage criteria on deposits required by each bank is listed below. We have put them in the order of the banks that are actually lending.

Banks Lending Normally:
AIB, ICS, BOI all require at least an 8% deposit.

Banks Drip Feeding Lending:
EBS 8%
Haven & KBC 20%

Banks That are essentially Not Lending:
INBS 10%
NIB 20%
BOS 20%
PTsb 10%
First Active (Not doing any new mortgages)
Ulsterbank 10%

The banks that are currently lending in a regular fashion all provide 92% finance, it will be no surprise that they are headed for the maximum market share on lending in 2009, obviously the €1,000,000,000 that we gave each of them earmarked for first time buyers helps a lot too! In any case, there are plenty of banks and lenders to choose from, the issue is currently more about ‘who’ is lending as opposed to what prices or options are available, if you can’t get approved with one of the current primary lenders then you may have to wait up to 3 weeks for an initial response or find yourself with the option of a variable rate which is 400 basis points above ECB.

I was asked by a colleague in the UK to provide an overview of the Irish mortgage market, he has often advised the Bank of England in the past on the UK buy to let market, however this time it is in relation to a talk he was due to give to an international financial services group on the Irish economy. Below are the contents of my correspondence which is a no holds barred view of the mortgage market in 2009.

Remortgage: This area is finally starting to see some life again, the rate drops are filtering through and many of the people on fixed rates taken out in 2005/2006/2007  are shopping around, as always new business attracts better rates than existing customers so there is once again an argument for switching.

However, the many people who took out trackers are basically out of the market in the long term as every single lender has removed tracker mortgages from the market, in fact, if you know of a lender willing to do tracker mortgages in Ireland they could hit the market and win on that basis alone, trackers are consigned to financial history on the emerald isle - at least for now.

The one area that seems to be getting some transaction speed is that of top-ups for improvements, people are not gearing up to buy a new house, instead they will improve that which they have already. The one downside is that many Irish lenders will not do a totally separate second mortgage top up - keeping the original at its rate/term etc.- and the reason is because there are so many negative margin loans out there, almost every residential tracker is currently negative margin when you consider cost of funds [although that's doing better for now], cost of distribution, and then margin. The crunch hit the banks bad on these loans, some were as low as ECB+0.5% so you can only imagine what Euribor cost of funds being at over 1% above ECB during the bad days was doing to the book and liquidity of same!

Buy to let: This end of the market is basically dead, the issue is acute on the supply side but mainly on the demand side, there are estimates of between 45,000 and 100,000 empty units (some unofficial sources cite even more than that). The industry economists all figure from 60-100k of empties, that means the supply side is swamped for a population the size of Ireland. Prices will fall and residential sales are going to be a slaughterhouse for some time to come.

On the demand side the issue is that paradoxically prices and rents are falling in tandem, a damnable situation, prices fall due to oversupply and confidence/credit crunch etc. the rental prices are falling because of oversupply of stock, competition for tenants, a need to meet payments even if it is loss reduction rather than meaningful yield, as well as that many of the Eastern European renters are returning home. Completions are still flowing  through, on the issue of attracting a tenant the competition for tenants is high, i had to drop rent by c. 45% on my Irish investment property to get it occupied.

The sensible proposition at present is that the state could buy some really cheap social housing, or if a buyer had enough cash/finance they could likely  bulk buy units at huge discounts, having said that, accurate market valuations are hard to come by, it is in the realm of educated guesses because with many distressed sales due to developer/owner going broke a suppressed price implies the ‘market’ price which is not the case in truth but the market only accepts that as it is the point at which a transaction occurred.

For me, i don’t really care about prices, instead i am watching yields and when they get over 7% investors will go back in feet first. I think the concept of cash flow will be the fundamental in property in the short to medium term, it is going to be viewed the same as bonds currently are - yields yields yields. Really it was continued market strength (when yields stopped making sense) seeking capital appreciation that caused the pendulum to swing so far beyond acceptable values.

Switching: moving lenders is really bunched in with re-mortgaging, the idea of using your house like an ATM is no longer popular [rightly so] thus the movement in the switching market is the same as the re-mortgage market. There are deals being done but a trend we have noticed is that it is primarily people who are on bad value variable deals already, again, the folks with trackers will likely sit tight unless we get the inflation wave [which I personally expect] at the end of this which may entice them onto fixed rates in the future.

New home buyers: an area with at least some life in it! Many buyers realise that prices are much lower as are interest rates, if rates go up 1% you would need to have bought a house for a few grand less on price to make up the difference, its an interesting mathematical approach which people need to be aware of. A house for €300k over 30 yrs. at 4% is actually €6,000 cheaper than a €270k house at 5% and with the long term rate outlook being a rise eventually it is perhaps better to lock in now rather than later, personally that is my intention.

The state is getting on board with a thing called homechoiceloan which is literally like a mortgage bank, they already do shared ownership and affordable housing too, currently even with 20% discounts many banks won’t lend on these, partly due to councils not being in line with the actual market - their valuers price totally differently than independent valuers - and then the profile of the lender who qualifies for this kind of loan. In many cases developers are selling for comparable prices with ‘affordable housing’ diminishing the attraction of the programme.

Developers are slashing prices, one in Kerry is actually doing a 2 for the price of 1, who would have thought you’d ever see that in property!

Niches Markets: The only one I would consider at the moment is distressed debt/portfolios. The confidence is so utterly low that people would literally sell at cost to get out of deals/debts. Commercial property is now taking a spectacular dive, if you had a good tenant arranger and the right finance this may be an option, stamp on this is likely to get changed in the near future, but for now its a total barrier to entry. Unless you were to get into buying properties with motivated buyers and turning them into duplex’s etc. in desirable locations then I wouldn’t have any novel ideas currently but that depends on your timeframe to a degree. The place with the most movement is the first time buyer market and after that the remortgage market.

Product guide:

Homeloans: We are now in a market with fixed rates, variable rates, and LTV variables, where you get a variable [no fixed margin] depending on the LTV, rates are c. 3-6% many banks don’t have the money to lend so they are using the blunt instrument of tranche management and high rates to control the book.

Changes in strategy of lenders: Hardened criteria and industry underwriting are prevalent, for instance, if you work in finance it seems you are persona non grata, in the past 100% mortgages were everywhere, now LTV’s are averaging much less, several lenders - Haven, KBC [formerly IIB] are only doing 80% loans, others are offering 90% but getting the money and approval requires the patience of Job and the earnings potential of Warren Buffet. suffice to say the market is not frozen but a single sentence sums it up

“Banks will lend to very strong candidates, on good collateral at high margins” - almost sounds like an old central bank mission statement!

Who is the best: The Irish banks will be partly recapitalised, as regards balance the best is likely AIB, regarding product they are also top table much of the time, Ptsb is likely to reduce or even remove some offerings, First Active/Ulster [RBS owned] are not very competitive, they are doing some 90% loans but ensuring they get the margin for doing so. Haven/EBS are lending but the press have been releasing many rumours about their financial health, unlike many banks they still have men on the ground though which is a good sign. Bank of Ireland have harsh criteria but decent rates, top end of the mid-table. NIB who don’t deal with brokers are offering a lot of really good deals but at their multipliers - even with low property prices - few would qualify, they are the best for low LTV’s, as regards an ‘approach’ i guess i would say caution is king.

Borrower integrity: The reduction in lender integrity is there but both pre and post lending but thus far it is down to job loss/redundancy and the things that are killing every economy in the developed world. Certainly the underwriters have developed a new brand of risk aversion where they factor in eventualities that don’t even exist, for instance - successful currency trader refused [we didn't even ask them to consider bonus etc.] because the institution he worked for got downgraded by S&P.

Equity release for retired couples: if you are talking about residential reversions or reverse mortgages then these are gone from the market, the companies offering this have all closed down, they had the double hit of factoring in too much on the potential growth of Irish property, one of them did securitise the loans out one house at a time which I thought was novel but the business model broke irrespective of this.

Regarding a brokers ability to trade: Falling prices, yes, this took confidence and transactions out of the market, we are in the transaction business so if prices dropped it doesn’t ruin brokers, it’s when transactions freeze up that we get hit. Probably the harshest development is the confidence killer that is combination of credit crunch/falling prices/credit criteria - albeit some of these are required to reach market clearing levels. Naturally prices will drop beyond true value on the way down the way they exceeded true value on the way up, the issue is when and more importantly what is the true market value.

Negative equity: The press seem to love to write about this one, I have often argued that negative equity is interpreted rather badly, it only becomes negative if realised, actually being in negative equity doesn’t change anything unless you are also forced to sell and crystallize the loss, however, for those who do find themselves in that position it is catastrophic. And the harsh reality of having paid more for a property than it is worth is a confidence and financial killer. It has turned people off of buying and it gets mentioned virtually every day in the papers.

Reduced lending capacity: This is the other part of the squeeze on prices, we spoke about supply and demand already, the reduced supply of credit is a third factor which is pushing the prices of property down from outside of the property specific supply demand spectrum. There is nothing one can do about this and yet you can only wonder what would happen if credit became easily obtainable again, I don’t know that we would see reflation unless there was a zero rate policy and a huge money supply creation which is a circular proposition as at the root of this crisis are low interest rates, increased liquidity and money supply.

Lenders cutting out brokers: This is key, originate and hold seems to be the route for many banks as they move away from the originate to sell/securitise model, we are seeing dual pricing and it is there to specifically remove the broker, banks say it is so that they can get the cherry on top [life assurance etc.]. The intermediary market makes less sense in a downturn, why pay a broker when you already have to cover branch costs? And in a market as simple - in terms of lenders and options- as the irish one the argument for ‘going direct’ is strong, particularly in advertisements. We are still only at a 50% penetration for broker use for mortgages which is substantially less than the UK.

Reduced commissions are the other side of the coin, and this is the one that may be the rock many brokers perish on, costs have not reduced at the speed that commissions have. Commissions have dropped on average by 30% but the main banks lending dropped by c. 50% so the actual hit to a working brokerage is c. 40%, this when combined with a massive restriction of credit in a falling property market has created what we can only describe as ‘the perfect storm’.

However, we are not being discriminated against, the overall picture in banking is bleak at the moment, I’m an ‘optimistic bear’ for now. The banks are getting hit on both sides as well, impairment charges are high which hurts liquidity, their book, and their ratings. The rush for depositors means they have to offer exceptionally high deposit rates (compared to historic norms v.s. base rates/euribor), and when rates drop they are being pressurised into passing on the rate cuts to the mortgage market. This is actually bad for them though because they can’t do the same to the depositors or they will move their deposits so the compression sets in of reduced mortgage margin and paying out higher deposit margin, it is actually the opposite of the traditional banking model and somebody will go bang due to it, already banks have required capital injections. [since writing Anglo were taken over by the State]

This should be enough to give you the general idea of how it looks in Ireland coming into 2009.

Our firm [and I am sure many brokerage firms] are witnessing a conundrum in the market which is causing both clients and the broker a huge amount of heartache. It is that of the ‘AIP’ or ‘Approval In Principle’ not being honoured by banks over short periods of time. One lender in particular [we can't name names] is doing that on so many cases that we no longer consider their approvals as holding any relevance.

What is an approval in principle (A.I.P. is the broker-speak we use to describe them)? It generally means that you have given a bank enough information to make a strong [and yet preliminary] decision on a case, sometimes it is subject to further documentation, or they want to get a valuation report before making a full offer, in any case an AIP is NOT a loan offer but it is as strong an indication as one can get without dealing with solicitors, in the past an AIP was honoured almost exclusively and they were seen as fundamental to operating within your budget.

When did banks start to change their minds on AIP’s? Well, like many things 2008 was the year! Although recently they have changed their direction a little in how they are doing it, last year they would say ‘criteria changed’ or give some other equally useless excuse, now they are just telling us ‘we are not doing that deal’. If you want a cure for low blood pressure then try explaining that to a client who was told that an AIP was something that a bank would honour as long as the conditions on it were met.

So we now find ourselves in a situation where an AIP is merely part of the formality of getting a loan offer, and worse again is that we are trying to get loan offers as quick as possible before the banks change their mind and revoke it which puts stress into an already stressed financial system. When an approval no longer means an approval then the only other choice is to get an ‘offer letter’ but doing so will cost in terms of valuations fees, engineer reports etc. and it merely distorts a functional system into a broken one. We strongly urge banks to desist from such calamitous practice, it is one thing to be frenzied in a crisis but another to act disgracefully in the face of it.

This post is a brief account of the residential mortgage providers in the Irish mortgage market, a brief look at who they are and what kind of lending they are involved in. Many people have no idea who is who, or who owns who so this should help to clarify some of that. Of course, as a broker we can help guide you through the myriad of lenders and options, but even our expertise is not an adequate replacement

The list of lenders in residential mortgages are (in no particular order)

1. IIB Homeloans
2. Haven
3. PTsb
4. First Active
5. EBS
6. Irish Nationwide
7. ACC Bank
8. Bank of Ireland
9. Springboard
10. Start Mortgages
11. Nua Homeloans
12. GE Money
13. Leeds Building Society
14. Bank of Scotland
15. ICS
16. NIB
17. Ulsterbank
18. AIB

Who they are and what kind of lending do they do?

1. IIB Homeloans: This is ‘Irish Intercontinental Bank’ and they were once owned by Irish Life, they then got bought out by KBC. So who owns IIB now? KBC do, they are a good firm and KBC have had virtually no exposure to sub-prime loans, IIB did have a firm called ‘Stepstone‘ who were a subprime lender but they were closed shortly after starting. IIB are 95% broker channel with a small direct sales side. This means that almost all of their business is placed via brokers. The important thing to realise here is that they have about 12.5% of the residential mortgage market, if you didn’t use a broker you likely didn’t use them because they mostly deal only with broker loans. It re-enforces our belief that you have to talk to a broker to get independent advice.

2. Haven Mortgages: Haven is a broker only channel that is a subsidiary of the EBS, it was launched in 2007 and it is quickly gaining market share, their proposition is not identical to the EBS and access to their loans is exclusively through brokers. Haven is based away from the EBS (it’s located on Amien’s St.) and it operates as a seperate entity. They are quickly proving to be an innovative leader and the additional competition within the market is welcome. Currently however they have been raising their rates because (as is the case with most lenders) of the interbank markets, in addition, they source their money via the EBS so one concern for a broker only channel is whether or not they will be able to remain competitive with the EBS.

3. PTsb/Permanent TSB: This banks was formed when the building society Irish Permanent amalgamated with TSB (Trustee Savings Bank) later this new institution merged with Irish Life to become IL&P (Irish Life & Permanent), so PTsb is the banking wing of the Irish Life group. They are a massive lender who command almost a quarter of the residential mortgage market. They have been aided in their growth by strong support from the intermediary channel upon which they rely heavily. The share price of the Irish Life & Permanent group has been highlighted recently for poor performance but the actual company itself remains a market leader.

4. First Active: This was initially a building society that later got listed as a public company in 1998 and was later bought by RBS (Royal Bank of Scotland) in 2004. First Active had a strong history of home loans and although they have banking and savings facilities their penetration in that market is minimal. Their current host of rates are considered to be amongst the most expensive in the market and they have been the first to re-introduce certain types of mortgage fees.

5. EBS (Educational Building Society): This is Ireland largest building society, having said that building societies are thin on the ground as most have graduated up to fully fledged banks. They have branches and franchises, the franchises look and feel like any other EBS but they are owned by a franchisee. As the EBS is not a bank it doesn’t offer current accounts, but it does have ATM’s via AIB and credit cards via MBNA. Their investments are tied to Irish Life. In 2007 they launched a broker only channel called ‘Haven’. Traditionally EBS were known as a ‘first time buyers’ bank however, they have left that moniker behind and are known

6. Irish Nationwide Building Society: This firm is one of the smaller players on the market, historically their rates are also amongst the highest in the market, for this reason they are often seen as a lender of last resort in the mortgage market. Having said that, Irish Nationwide continue to remain profitable in the market and they seem to have escaped the sub-prime debacle, they also have a range of attractive deposit products.

7. ACC Bank (Agricultural Credit Corporation): Is primarily a commercial bank which focuses on agriculture and SME firms, typically when you wanted to borrow to buy land for farming ACC were the only lender who would look at this, they hold a strong niche in that respect. In 2002 Rabobank bought ACC and they are now a fully owned subsidiary. There are about 40 branches of ACC bank in Ireland, the firms focus going forward is to move into the business banking sector. If RaboBank decide to pursue a residential lending arm to their business then it is likely that ACC will be the conduit for this.

8. Bank of Ireland: BOI shares have taken one of the most severe hits in recent months, formed in 1783 Bank of Ireland is the oldest bank in Ireland. Bank of Ireland offer a full range of financial services, from credit cards to mortgages, they have an extensive branch system and they are a major lender in the residential market and they have exceptional market share in the commercial property section. Bank of Ireland are not generally dealt with via brokers because they never developed that channel fully, instead they worked on developing their subsidiary ICS into a broker channel for the group.

9. Springboard Mortgages: This was a joint venture by Merrill Lynch and PTsb which focuses on specialist or sub-prime loans. The Irish market saw a swath of entrants into the lending market from 2004 including firms such as Fresh (no longer operating) and Stepstone (no longer operating). Springboard is almost exclusively a broker only channel. Merrill Lynch removed themselves from the JV in mid 2008 and Springboard is now a fully owned subsidiary of PTsb. The exact details of the move were not disclosed. Springboard continue to offer specialist loans and they are amongst the remaining four players in the specialist market.

10. Start Mortgages: Despite being the second entrant to the market Start Mortgages actually took the largest market share in Ireland after commencing operations here, at the time they arrived the only lender offering specialist loans was GE. Start were owned by Kensington in the UK and later the group was sold to Investec. Start is an innovative lender and they championed many concepts in the Irish mortgage market, however, as is the case with all lenders, the crunch has resulted in a slowdown in lending levels.

11. Nua Homeloans: This is one of the newest players on the Irish mortgage market and they are also owned by Investec. Investec now have two players in the Irish subprime market so there is a belief among many that we will see either a sale of one of the banks or perhaps a consolidation or rebranding of both firms into one. In the interim Nua are gaining market share, they have embraced an electronic platform which makes dealing with them exceptionally easy, they are amongst the front runners in the Irish market to have achieved this.

12. GE Money: GE were the original sub-prime lender in Ireland, they entered the market back in 2003 with their first proposition. At the time they were basically consolidating ‘near prime’ loans and for this reason they left the niche open which gave Start Mortgages the opportunity they took when they entered the market. GE have since made aggressive inroads into the market on several fronts from mortgages for people with bad debt to personal loans and car finance (they had been in personal loans and finance all along). GE is one of the worlds largest companies and they are active in almost ever facet of business known.

13. Leeds Building Society: Leeds is the newest entrant on the market and they are a British Building Society (7th largest in the UK) and they came to market with a tracker/LTV proposal financing properties with a ‘one size fits all’ tracker for properties of 80% or less LTV. They operate on multiples which limits their ability to lend to many highly geared Irish properties however, their market share was impressive in their first two years of operation and they are a welcome competitor to the market. Their rates are hugely attractive at present as they offer trackers at ECB + 1.45% in a market where everybody else seems to be pushing for margins of 2%.

14. Bank of Scotland Ireland (BOSI): This is a firm that was brought to Ireland by brokers, they introduced tracker mortgages, and in essence it was BOSI who shook the market up, most of the public don’t really think about the fact that BOSI was a broker only bank that introduced Trackers to the Irish market, trackers are the most transparent and best value long term loans available, other banks soon followed suit and copied the BOSI proposal. Recently the firm has had difficulties because their mother company HBOS is having issues, they also started a retail only channel in Ireland Halifax, the move to retail has not proved as successful as they had hoped for and brokerage still accounts for most of their business.

15. ICS (Irish Civil Service) Building Society: This was once a state owned lender exclusively for use by civil servants, it was later sold to Bank of Ireland and it is a wholly owned subsidiary, they distribute mortgages almost exclusively through brokers and they tend to have a product offering that is slightly better (historically) than BOI, their direct sales branches are branded as ‘The Mortgage Store’ however, clients entering their premises can only be offered an ICS loan, on the life front they would be able to broker different products from institutions such as New Ireland or Eagle Star.

16. National Irish Bank (NIB): This is the southern version of ‘Northern Bank’ (of robbery fame). They were bought by Danske Bank in 2004 from National Australia Bank who had bought NIB in 1987. NIB are best known for polar opposite events, on one hand (long ago) they had helped clients open accounts under false names and evade tax, they overcharged customers, their ex-head of financial advice is barred from being a company director. However under Danske they have become known for positive reasons, namely their ‘LTV tracker’ which has been and remains one of the best value loans on the market. Mind you, their variable rate is amongst the worst in the market, but for the client who knows what they want and how to spot value their LTV tracker is unmatched. In a nutshell NIB can’t be touched by any other lender when it comes to trackers, the main gripe brokers have with them is that we can’t place loans with them!

17. Ulsterbank: This bank is owned by RBS and like its sister firm First Active their rates are amongst the most expensive in the market. They had a broker proposition and then in 2008 with minimal notification they informed the market (by email) that they would pursue a ‘branch only’ model, they had a competitive offering from 2004-2006 but since that time their loans have not been popular within the intermediary channel.

18. Allied Irish Bank (AIB): AIB has the largest branch network in the country, only BOI is near them, they are one of the ‘Big Four’ in banking in Ireland. They offer insurances via Ark Life and they are involved in every major facet of banking, from commercial lending to residential. On the residential front their primary distribution is via their branches, AIB do deal with brokers, it used to be via a channel called AIF (Allied Irish Finance & Leasing) but this was merged with the main group in 2005. The bank was only formed in 1966 by the purchase and merger of three other banks. Poland is a large area of AIB’s operations in the new millennium. Their lending policy is considered by many to be ‘profile’ based rather than strictly ‘underwriting’ based, and for that reason they are not the lender of choice for many cases, but for the type of business they do want they are a lender who demonstrates total flexibility and service.

That is a basic run down of the mortgage providers in the Irish market. No broker can really claim to have agencies with ‘all of them’ for residential lending. If you have any questions about this or any of the posts you see here be sure to call us! 01 6790990

Just a quick note to readers, Irish Mortgage Brokers is an intermediary, we go between you and the bank to arrange finance. You can go direct yourself and get the same mortgage, however, over half of the market uses and intermediary to arrange their finance, this is normally because they don’t really how to get a mortgage in Ireland or because they find using a broker easier than dealing with the job directly. And some people just prefer the personal touch of a broker over that of call centres and branches.

If you want to find the best Irish mortgage rates you can do so in a simple phone call or online application, click on the ‘home’ button above and apply over the web or call us on 01 6790990 and an agent will be able to assist you. The people we tend to work with are clients looking for a First Time mortgage in Ireland, people who want to find out how to remortgage a property, commercial lending, and trading up/down.

We are regulated by the Financial Regulator as a mortgage intermediary and also as a multi-agency intermediary, so we can advise you on mortgages and investment products such as pensions, PRSA’s, bonds, and life assurance.

If you want to learn more about tracker mortgages we can let you know about the offers in the market, and we keep people up to date when we get an ECB rate increase or decrease. We believe that some time soon the banks will rationalise their market proposal and move to Euribor mortgages, or Euribor tracker loans. Brokers are not the solution for everybody, however, our clients come back time after time so that is testament in itself. We hope you enjoy the serious articles we normally focus on in our blog, this is just a quick note to tell you something about ourselves!