Avant Money, one of the country’s newest mortgage lenders, has stated that the current loan-to-income ratio rules are challenging for middle-income earners and that lenders should be able to factor rental payments into account when assessing borrowers.
Brian Lande, Avant Money’s head of mortgage lending, said in an interview with the Sunday independent.
Speaking of the Central Bank of Ireland’s review of mortgage loan regulations, Lande said Avant Money supports macroprudential regulations and looks forward to the results of the loan cap review.
“I think the mortgage lending value is 80 to 90 pieces [are something] We feel comfortable as lenders. We believe that people need to have a sense of equity, deposits, or savings in a mortgage offer.
“From a moral hazard perspective, we think it’s important that customers can contribute. The 100 percent mortgages of the past were part of our financial crash problem in the last sequence. “
However, Lande said he believed the credit-to-income rule at 3.5 times earnings would “clearly challenge medium-earners,” citing teachers as an example.
“House price inflation is so great that in some cases it is even pricing out of the commuter belt. There is a reasonable argument for CBI to look at what is known as “prudent repayment ability”. So if someone has been able to fund a higher rent payment, this needs to be taken into account. That has a certain reasonableness. “
Lande said he believed home prices would go up because of a lack of supply, not because of the CBI rules on mortgages.
“The demand is huge. Many people built up their savings and deposits during the lockdown. There are a lot of very well paid people in the Dublin market … Too many people are chasing too few houses. “
Lande added that roughly half of those who applied for a mortgage with Avant Money had no property identified when applying.
He said it was standard banking practice to basically give people six month mortgage approval, which in the past would have been enough to buy a property. However, Lande said Avant Money had seen an increase in the number of people returning after six months to basically re-date their consent after failing to find a home.
“That suggests they can’t find a property during this time,” he said. “I don’t have an exact number, but it’s definitely over 50 percent of these applicants [who] come back for at least a ‘second loop’. “
Lande said Avant Money has received $ 1 billion in mortgage applications in the year since the product was launched last September.
He expected Avant to consume around 3 percent of the mortgage market this year, which he believes will reach between € 9 billion and € 10 billion in borrowings.
Avant Money plans to grow. He said it currently serves around three-quarters of the market and is expected to serve more than 50 brokers in the next six months.
“We’re here to deliver great value,” he said. “We certainly do this with mortgages, where we’re pretty much the lowest price on almost all mortgage bands and products.”