Bank of Ireland wants to lend. And as proof of its committment to the mortgage market, especially the first time buyer market, the bank has announced a little incentive to help buyers along the decision process. For first time buyers that take out a mortgage with the bank, it will refund their stamp duty bill following completion of the mortgage. At 1% of the property price, this is a generous offer and no doubt, a welcome one by a market segment that will be looking to conserve every penny following their new home purchase.
Over the course of the last 7 years, the narrative across Ireland has been for more mortgages. Mortgage lending fell 92% since peaking in 2006 when 111,000 mortgages were drawn down (this excludes top-up and switchers). Mortgage brokers, estate agents, even the Taoiseach were critical of the banking sector for the lack of lending across the country.
Last summer, a report detailing the entry of Investec into the Irish mortgage market was widely welcomed as a potential market disruptor. The entry of the lender never materialized. At the time, a range of broker services were highly supportive of the move as it would have resulted in a high proportion of mortgage transactions being processed through their services, the lender would have been heavily reliant on the broker network to reach customers.
Today, some brokers have come out against the Bank of Ireland incentive. Without any obvious or clear banking strategy, the mortgage broker sector appears confused. It calls for increased levels of mortgage lending yet criticizes Bank of Ireland for designing a mortgage programme that encourages just that. The only difference between Investec and Bank of Ireland is the level of reliance each would have on the mortgage broker network. Supportive when there is more, critical when there is less.
Damned when they don’t and damned when they do, it seems banks simply can’t win, which is why they may as well get on with what they do best, which is just be themselves!