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This week Irish mortgage rates dipped below 2% for the first time in history.

But who qualifies for this tasty 1.95% mortgage rate…and what does it mean for your pocket?

And exactly who are lender Avant Money, the first major bank to arrive here, since the 2008 financial crisis?

Can they really cut tens of thousands off  our mortgage bills?

Here are your answers:

How much money can I save?

That depends on how much you owe and what interest you are already paying.

For example someone who is on the dearest variable rate (BoI’s 4.5%) who moved to Avant Money’s 2.1%  could save a whopping €488.07 a month, according to Bonkers.ie. 

But if that same person were on the next most competitive rate to Avant Money, they would save only €38 a month, although that would still add up to a princely total of €8704 over the mortgage term.

The table we use on these pages adopts the latter more conservative approach to how much can be saved by comparing its rates to nearest competitors. In reality, most people wouldn’t be on the most competitive rates and could save a lot more.

Who are the biggest winners?

The 2.1% fixed rate quoted above is for people with a loan-to-value (LTV) rate of 70% or less. 

That particularly juicy 1.95% rate is for those who borrow 60% or less of their property value. The rates for other borrowers are just over 2% which still beats most other deals on the market. Also the mere arrival of a serious competitor should shake up the market, so everyone wins.

But what will I pay when the fixed rate is up?

That depends on your loan-to-value rate. Avant Money variable rates range from 2.5% to 2.75%, which would still the best around.

What about First Time Buyers (FTBs)?

FTBs with a big deposit will get the tasty deals outlined above. But if they only have a 10%-20% deposit, Avant Money’s best rate is 2.35% fixed for three years.  That’s still an excellent rate and only bettered by Ulster Bank and KBC who both have a 2 year-fixed-rate deal at 2.3%. Even then, to get the KBC rate you must transfer your current account to them among other “strings attached."

Are there any catches?

The main one seems to be that Avant Money, unlike most Irish lenders, doesn’t offer any cash back or help with switching which costs at least €1200 for solicitor’s and valuer’s fees. However, the long term savings far outweigh that cost.

What have other banks done in response?

Not much so far. AIB immediately cut a fixed rate mortgage by 0.2% - but then also introduced a new tiered system so that the rate you get depends on the LTV of your loan. In short, those who borrow 90% did not benefit from the move and those who borrowed 60-80% only benefitted from a 0.1% cut.

We have yet to hear from Bank of Ireland but it is unlikely to be quaking in its boots about a new competitor that offers great rates but has no branches and relies on brokers almost entirely based in Dublin.

PTSB recently cut its rates and relies on its cashback deal so is unlikely to react strongly. The best hope for a sizeable cut is Ulster Bank, which prides itself on low fixed rate deals that have been now undercut by Avant Money.

Where can I get an Avant Money mortgage?

Like all of the other new banks on the Irish scene, Avant Money doesn’t have branches.

In a statement, it said “mortgages will initially be available through a panel of mortgage brokers”, all regulated by the Central Bank of Ireland.  A full list can be found on website, www.avantmoney.ie.

However, a quick scan through it reveals that 17 of the 19 brokers are based in Dublin with the other two in Wicklow and Cork.

Will they expand on that? And what’s this I hear about Avant Money mortgages and post offices?

Note the use of the word “initially” in the statement above. So hopefully, Avant Money will improve access to its undoubtedly good deals.  What you may have heard is speculation last year linking it to An Post after the latter caused a stir by stating that it wanted to enter the mortgage market in partnership with a very cheap lender that some speculated may have been Avant Money. That sort of link up would bring Avant Money into every town and village in Ireland. But An Post then said it was suspending its mortgage venture due to Covid 19. But watch this space.

Who and what are Avant Money?

Before now, they were a finance firm known for credit cards and personal loans with tiered rates that vary depending on your financial record and circumstances.  They had the cheapest loans if you are financially well-off and very well-behaved but much less so if you are not. They were bought last year by a major Spanish lender – Bank Inter – who are now entering the Irish mortgage market via Avant Money.

Are they safe and reliable?

Bank Inter are an EU regulated bank and are as safe as any bank. Maybe a bit more so as they are spread over more markets than Irish banks. They have been offering similar - and lower - interest rates in Spain for years.

Are they regulated by the Central Bank?

Avant Money is regulated by the Central Bank, which means it must comply with its mortgage lending rules such as limiting borrowing to 3.5 times incomes and 80% of the property value (90% for FTBs) with few exceptions available now. It must also follow CB guidelines on how they deal with distressed borrowers.