Fresh challenge to big banks as new lender MoCo launches first Irish mortgage offering

The interest rates offered on shorter term fixed deals are similar to prevailing market rates, with €1,500 cashback on all products.

MoCo, which is owned by Austrian bank Bawag, will add some much-needed competition in the Irish home-loans market, which is dominated by AIB and Bank of Ireland.

The new lender’s deals are only available through mortgage brokers and are available for homebuyers across the country. MoCo’s minimum mortgage level is €125,000.

Martina Hennessy, CEO of mortgage broker Doddl, said the arrival of MoCo takes the number of lenders in the Irish market to 10.

"Increased competition leads to more discipline in the market which is extremely important given that the lion’s share of the market sits with three lenders,” she said

The new entrant is understood to be highly digitally focused – including client onboarding and utilisation of Open Banking to remove the requirement for paper statements from applicants. That should allow for fast decisions on mortgage applications.

Today's News in 90 Seconds - January 18th

Martina Hennessy said MoCo’s underwriting policy is more favourable than other lenders to borrowers whose pay is in part variable – such as overtime, bonus or commission – allowing a larger portion of this variable income to be taken into account for mortgage eligibility purposes.

Vienna-based Bawag bought startup MoCo for a nominal sum in March last year and has used its banking licence to allow MoCo to offer mortgages in this State.

Bawag bought out MoCo in a deal that wiped out its founding investors. MoCo was set up three years ago but had yet to receive Central Bank of Ireland authorisation. Now that it is owned by Bawag it will be able to operate in this market.

At one stage MoCo was known to have been in talks to enter into a mortgage joint venture with An Post.

The State-owned postal service has been looking for a partner to enter the mortgage market for the past five years.

The MoCo-Bawag model is similar to Bankinter’s Avant Money brand, which operates as a standalone brand in the Irish market but is owned by the Spanish lender.

It is understood that the MoCo business model relies on European Central Bank mortgage interest rates falling. Lower rates would allow it to offer competitive mortgage rates and generate a profit.

As it is backed by a bank, MoCo is unlikely to face the challenges thrown up by an era of higher interest rates for non-bank lenders Finance Ireland and Dilosk/ICS that source their funding for new mortgage lending on the financial markets.