Seventeen years after the end of the Celtic Tiger era, a new type of mortgage is making its way back to Ireland. Avant Money, a subsidiary of the Spanish banking group Bankinter, is introducing the Flex Mortgage, a product linked to the European wholesale interest rate with a fixed margin. This offering allows borrowers to make extra payments, pay off their mortgage early without penalties, and switch to a fixed rate with Avant Money at no additional cost.
While Avant Money clarifies that this isn't a traditional tracker mortgage, it is a variable-rate mortgage tied to the average Euribor rate from the previous year. Unlike standard tracker mortgages that follow European Central Bank rates, this new product's interest rate is determined by the Euribor rate plus a fixed margin, rather than being set by the bank.
Currently, over 20% of borrowers choose either a variable rate or a one-year fixed rate to avoid long-term commitments during a period of declining ECB and market interest rates. The Flex Mortgage will have a margin of 0.9% over the Euribor rate for loans covering 80% or less of the property's value, and 1.1% for loans exceeding that threshold. The Euribor rate is reviewed annually, providing transparency for customers.
For instance, someone taking out a Flex Mortgage next month with a loan covering 80% or less of their property's value could start with an interest rate of 3.31%, which is nearly one percentage point lower than many standard variable-rate mortgages. This product is ideal for those expecting market interest rates to drop and who wish to avoid being locked into higher rates. It also benefits those planning to make additional payments due to expected financial windfalls.
Available to both new and existing Avant Money customers through brokers, the Flex Mortgage is part of Avant Money's strategy to offer more options to Irish consumers. Brian Lande, head of mortgages at Avant Money, expressed enthusiasm about bringing this popular European mortgage model to Ireland.
Bankinter, ranked among the top 50 European banks, is set to establish a full branch in Ireland, marking the first entry of a traditional foreign lender into the Irish retail banking market since 2005.