Irish lender Dilosk is planning to raise at least another €200 million to fund new buy-to-let mortgage lending in Ireland to capitalise on the growing demand for rental accommodation in the major urban centres.
The news comes as the company, which bought the ICS Mortgages brand from Bank of Ireland in 2014, prepares to launch a buy-to-let product called 'Flexi-Mortgage', which offers a 35-year term and allows customers split their repayments between interest only, and full capital and interest payments over the term of the loan.
Customers can choose an interest-only term of between one and 10 years followed by capital and interest payments term for the remaining portion. Currently, the longest term available for a buy-to-let mortgage here is 25 years.
Interest ratess start at 4.75 per cent and the product will be available to new property investors purchasing their first rental, and existing investors looking to expand their portfolio, refinance or release equity.
This will complement ICS’s existing buy-to-let product range, which also includes a five-to-15 year interest only option, and a five-to-20 year capital and interest option.
Commening on the new product, Dilosk chief executive Fergal McGrath said: “We are delighted to be launching this unique product, which will appeal to property investors looking for a longer-term option, repayment flexibility and the ability to repay the loan in full by the end of the term.
“ There has been a lack of access to mortgage finance for buy-to-let property investors over the last number of years and this has been one of the key elements of our complex housing situation in Ireland. We now have a suite of products which are proving to be appealing to landlords throughout the country.”
Mr McGrath noted that there has been a decline in home ownership in Ireland in recent years with the CSO last year putting it at 68 per cent - down from more than 80 per cent in the mid-2000s.
This has boosted the numbers renting, with some 175,000 residential buy-to-let landlords now in Ireland.
ICS will provide mortgages with a loan-to-value of up to 70 per cent. The minimum loan will be €40,000, rising up to €1.25 million, with terms of up to 35 years.
The loan must be paid in full by age 75 and the minimum property value has been set at €80,000. The mortgages will be available directly from ICS or through its networkof brokers.
Population
Dilosk will lend for properties in Dublin and the surrounding counties of Kildare, Wicklow, Meath, Louth. It will also lend against properties in Galway, Cork and Limerick, and other urban centres with a population of greater than 10,000 people.
Mr McGrath said Dilosk was “already looking at its next facility”, which would likely involve a “minimum €200 million [in new funding] or possibly more” being raised this year.
Dilosk previously raised €200 million in January 2017, from a European bank and its shareholders. By the end of last year, some €70 million worth of loans from this facility had been drawn down by customers. This gave it a near 23 per cent share of the €302 million in buy-to-let lending here last year.
This figure has since risen to €80 million, involving 380 loans. Mr McGrath said its “pipeline” of loans, including those drawn down, amounts to €171 million.
This is all some way off the €6 billion peak in buy-to-let lending in Ireland in 2007 with Mr McGrath predicting that this would rise to €1 billion-a-year by 2020.
“We are making good inroads into this market and capturing a good share,” he said.
Mr McGrath said Dilosk has no current plans to offer owner-occupied residential mortgages. “Not right now. However, we do have ambitions obviously.”
On the current state of the Irish housing market, Mr McGrath said: “It is going to take a number of years before we see equilibrium in the market between supply and demand.”
Dilosk acquired €223 million in performing loans from Bank of Ireland four years ago, mostly residential. These loans were later securitised, meaning the cashflow from the pool of loans was sold to a third party.
