Finance Ireland to offer 20-year fixed rate mortgage

The 20-year mortgage is twice the maximum length of any mortgage currently available in the Irish market

Non-bank lender Finance Ireland is to begin offering a 20-year fixed term rate on residential mortgages.

The 20-year term will be twice the maximum length of any mortgage currently available in the Irish market.

The move will mean that some borrowers will be able to retain the same rate for the entirety of the length of their loan.

"I've been involved with the Irish mortgage market for over 30 years and I believe that this is one of the most significant innovations made here in that time," Finance Ireland's chief executive Billy Kane said.

"We’ve been working on the introduction of longer dated fixed rates for some time now in order to allow customers benefit from the historically low interest rates now available," Billy Kane added.

The rates on the two decade long fixed home loans range from 2.6% for a loan to value (LTV) ratio of less than or equal to 60%, up to 2.99% for an LTV of less than or equal to 90%.

The company, founded by Billy Kane in 2018, is also to offer a range of 10 and 15 year mortgage products.

Finance Ireland says that customers will be able to move their mortgage to a new property during the term of the fixed rate without incurring any penalty.

The company also said that the fixed rate will decrease as the loan is paid down versus the property value.

The mortgages have been developed with funding partners M&G Investments.

Finance Ireland is 30% owned by the Ireland Strategic Investment Fund and employs 160 people.

Along with residential mortgages, the lender also offers commercial mortgages, auto finance, SME and agri finance and leasing.

"This is a very welcome announcement for new and existing mortgage holders and given its probable impact and the expected uptake, it is likely that other Lenders will follow," said Trevor Grant, chairperson of the Association of Irish Mortgage Advisors.

"Whilst mortgage interest rates are at an all-time low in the context of the Irish marketplace and are not likely to increase in the short term, they will eventually rise over time – something which mortgage holders will have to consider."

Mr Grant added that long-term fixed rates have been the norm across Europe and further afield for many years because they deliver certainty around the repayments on the mortgage.

Joey Sheahan, Head of Credit at MyMortgages.ie, said the news from Fnance Ireland is really likely to shake things up in the Irish mortgage market.

He said that will be both in terms of how mortgage holders approach their choice of term and rates, and in the fact that if the demand for these products are strong, other lenders will make moves to bring similar offerings on stream – if they are not already in the process of doing so.

Brokers Ireland said the move would give a "booster shot" to competition at a badly needed time when KBC and Ulster Bank are exiting the market.