Increased competition among mortgage lenders will benefit consumers, the president of the Independent Mortgage Advisers Federation (IMAF) has said. Calling for greater competition, Mr Michael Dowling said he was concerned about a lack of variation in interest rates offered by lenders.
"To date, nine of the 11 lenders in the market offer standard variable rates with less than 0.15 per cent variance within rates of 4.6 per cent and 4.75 per cent.
"This is a concern for our members who wish to see greater competition between lenders and to provide our customers with greater choice in the homeloan market," Mr Dowling said.
Outside this range of rates are AIB, which has a standard variable rate of 4.25 per cent, and Bank of Scotland, with a standard variable rate of 4.29 per cent.
The federation is continuing negotiations with two British lending institutions regarding entry into the Irish market.
It is understood both lenders are preparing papers on entry to the Irish market for the consideration of their boards of management.
"We believe there is room for another player or players in the market," Mr Dowling said.
He added that new players would aid competition in the mortgage market, offering more choice, flexibility and better service levels to consumers than currently exist.
"The results of our service excellence survey indicate that lenders in the Irish market are not delivering the levels of service that customers deserve," said Mr Dowling. Bank of Scotland, which entered the Irish market in 1999, had achieved the highest rankings for overall service levels to mortgage intermediaries, he said.
Bank of Scotland only lends 80 per cent of the purchase price to borrowers, thereby excluding most first-time buyers from its target market. Mr Dowling said it was hoped any players entering the Irish market would cater for first-time buyers.
IFG Mortgages, the largest independent mortgage broker in Ireland, has now joined the federation. The addition of IFG takes annual business by members up from €1.5 billion to €2.25 billion.
The federation is launching the second phase of its national awareness campaign today. Called Housewarming, the campaign seeks to highlight the importance of independence and choice when seeking mortgage advice.
The federation is running a television advertising campaign throughout the month of October, advising consumers to ensure their broker is IMAF-approved.
The campaign follows on from the federation's call on lenders late last year to pass on the full benefit of ECB interest rate reductions and to end discrimination between new and existing borrowers through the offering of low introductory rates.
