From a competitive standpoint, Investec’s entry to the Irish Mortgage market is to be welcomed.
The mortgage landscape has changed dramatically over the past five years.
Bank of Ireland issued 40% of mortgages last year, while AIB claims a market share of 46%.
Thatâ€™s an unhealthy concentration but, in banking, the competition rule book was thrown out the window when the global financial sector crashed and Governments were forced to bail out so many of the banks.
The â€˜Big Twoâ€™ have also nudged up their variable rates at a time when the European Central Bank is at an all-time low of 0.5%.
Investecâ€™s move is timely given that the housing market here is beginning to stir from its slumber, particularly in Dublin.
Figures from the Central Statistics Office suggest that house prices in Dublin were 8% higher in July than a year earlier.
Investec is expected to provide funding of about â‚¬250 million annually for new mortgages when it comes to market in the coming months. That equates to about 9.5% of the total mortgage drawdowns in 2012.
Given Bank of Ireland, AIB and the other lenders have stepped up the amounts they are making available for mortgages; the likelihood is that the â‚¬2.6billion in drawdowns from 2012 will be beaten. So Investecâ€™s share is likely to be sub 10%.
The South African bankâ€™s entry into the market wonâ€™t in itself be a game changer, but its willingness to take a punt on this market might provide a signal to the wider world that he housing market in Ireland has finally turned.
Summarised from The Irish Times article â€˜Investec Punt on Mortgage Market Sends Good Signalâ€™ by Business Affairs Correspondent Ciaran Hancock.