Finance Ireland eyes home loans

(L-R): Frank Donnellan Managing Director of First Auto Finance, the car finance subsidiary of Finance Ireland Jim Hickey Chief Operating Officer Finance Ireland and Billy Kane Managing Director Finance Ireland. Pic: Colm Mahady / Fennells

Eamon Quinn

Lender Finance Ireland is “actively considering” targeting first-time buyers by entering the residential mortgage market as it sees opportunities opening up in the €7.8bn new home loans market.

Billy Kane, the former Irish Permanent chief who helped set up Finance Ireland over 15 years ago, said a definitive decision whether to enter the home loans market would be taken in the next few months. Planning, however, appears at an advanced stage.

The company which has two main shareholders — the giant US fund Pimco and the State’s Ireland Strategic Investment Fund, or Isif —styles itself as the country’s largest non-bank lender.

Mr Kane played down the scale of its home loans plan, saying if it were to get the green light that the amount of lending would be “limited” and that its home loans would be sold through brokers.

Nonetheless, any new entry into lending for first-time buyers would be welcome news in a market that is tightly controlled by a handful of mortgage lenders.

Despite banks availing of ECB lending at rock-bottom levels over recent years, Irish borrowers pay among the costliest mortgages, and Irish SMEs pay among the highest rates for their business loans in the eurozone.

It is not clear whose funds Finance Ireland would tap to lend into the mortgage market.

The amount of new home lending grew last year to €7.8bn but is obviously a fraction of its huge size reached in the boom years before the onset of the banking and property crisis in 2008.

Finance Ireland, which is best known as a lender of car finance and to SMEs, already provides mortgages albeit commercial mortgages to landlords and investors.

It has a link with Isif and Glanbia Co-op through the MilkFlex fund which advances loans to dairy farmers. It will soon conclude its third fund-raising, a €30m equity placing understood to be with its existing two main shareholders.

Tapping the “strong” economy, it said it continued to grow strongly this year, with motor finance having “a particularly strong start”.

For 2017, it said it posted an underlying pre-tax profit of €8.3m, up from €2.5m in 2016.

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