ICS Mortgages will cut rates and lend up to 80 years in bid to rebuild market share – The Irish Times

ICS Mortgages has moved to reduce owner-occupier rates and extend repayment periods for borrowers into their 80s, as it looks to rebuild its market share after a period in which it signed very few such deals amid of the ECB’s rising interest rates.

The non-bank lender, owned by Dilosk, will reduce its three- and five-year fixed rates by half a percentage point from early June. This will raise its three-year rate for a loan of up to 80 per cent of a property’s value to 5.2 per cent and its five-year rate to 5 per cent, according to the group’s chief executive, Fergal McGrath.

The new rates will not leave ICS with a market-leading price on any of the product types, but they will bring it closer to the best rates offered in the Republic. Avant Money, owned by Spanish bank Bankinter, currently offers a five-year fixed rate of 3.8 percent, while AIB has a rate of 4.7 percent on a similar product.

Although McGrath declined to comment on future rate decisions, he said the company aims to “pass on” any reduction in its own financing costs to customers.

ICS, which accounted for around 5 per cent of new Irish owner-occupier lending in 2021, exited the market in the summer of 2022 as its parent, Dilosk, saw its funding costs soar in the wholesale and retail markets. capital.

Banks have had an advantage over non-bank lenders since the European Central Bank (ECB) raised rates in recent years as they can use cheap deposits to fund much of their loan books. AIB and the Bank of Ireland have around €60bn of combined surplus deposits parked and the Central Bank currently earns 4 per cent.

However, Dilosk’s funding costs have fallen this year as it made two deals to refinance mortgage packages into the residential mortgage-backed securities (RMBS) market. Last week it raised €200 million in an RMBS bond transaction.

ICS has also decided to increase the repayment age for home loans from 70 years, which has been the limit among lenders in the Irish market until recently, to 80 years. However, borrowers will have to demonstrate their ability to continue making payments until this age. , including rental and pension income.

“This feature can help and encourage people to move house as they get older,” he said.

It follows MoCo, a new mortgage lender on the market, owned by Austrian bank Bawag, which introduced a product allowing repayments of up to €80 earlier this year.

ICS has improved its offer to public sector employees this year, allowing basic pay to be calculated at three levels of the pay scale. Previously it allowed two levels.

ICS had remained active in the shrinking buy-to-let market in recent years, even while largely outside the owner-occupier space.