Tracker-style mortgages are making a comeback in Ireland, more than 17 years after they vanished from the market. Avant Money, a subsidiary of Spanish banking giant Bankinter, is introducing a new mortgage product called the Flex Mortgage. While it shares similarities with the traditional tracker mortgages of the past, there are key differences that set it apart.
This marks a significant shift in Ireland’s mortgage landscape, especially at a time when borrowers are looking for alternatives to long-term fixed-rate commitments. Here’s what you need to know about the return of this tracker-type mortgage and how it might impact homebuyers.
What Is the Flex Mortgage and How Does It Work?
Avant Money’s Flex Mortgage is designed to offer borrowers an interest rate benchmarked to the Euribor rate, plus a fixed margin. Euribor—the Euro Interbank Offered Rate—is the interest rate at which European banks lend to one another.
Unlike traditional tracker mortgages that followed European Central Bank (ECB) rates, this new product aligns with Euribor market rates, which are reviewed annually. Avant Money insists that the Flex Mortgage is not a tracker mortgage, but rather an adjustable variable-rate mortgage.
Key features of the Flex Mortgage:
- Linked to Euribor – The rate is based on the previous year’s average Euribor rate, plus a set margin.
- No Early Repayment Penalties – Borrowers can overpay or clear their mortgage early without incurring extra fees.
- Option to Switch to a Fixed Rate – Borrowers can transition to an Avant Money fixed-rate mortgage at no cost.
- Transparent Pricing – Euribor rates are publicly available, ensuring clarity on rate adjustments.
How the Interest Rates Are Structured
The Flex Mortgage will carry a margin over the Euribor rate, which will be set based on the loan-to-value (LTV) ratio:
- For borrowers with an LTV of 80% or less – The margin is 0.9 percentage points over the Euribor rate.
- For borrowers with an LTV above 80% – The margin increases to 1.1 percentage points over Euribor.
For example, with the 12-month Euribor rate currently at 2.4%, a borrower with an 80% or lower LTV could secure a rate of 3.31% at drawdown. This is almost one percentage point lower than many standard variable-rate mortgages available today.
Each year, the interest rate will be adjusted based on the latest 12-month average Euribor rate at the time of the mortgage anniversary. This structure ensures that borrowers will have clarity on their rates for the following year, making it a flexible yet predictable option.
Why Is Avant Money Introducing This Now?
Tracker mortgages played a major role in Ireland’s financial crisis, with many banks resorting to unethical tactics to remove customers from their tracker rates after the crash. However, with interest rates evolving and borrower preferences shifting, Avant Money sees an opportunity to introduce a European-style mortgage option to the Irish market.
According to Central Bank data, more than one in five borrowers are currently opting for either a variable rate or a one-year fixed rate. This trend suggests that many Irish mortgage holders are looking for short-term flexibility rather than committing to longer fixed-rate periods.
Brian Lande, Head of Mortgages at Avant Money, explained the rationale behind the new product:
“The Flex Mortgage is our latest innovation, designed to give Irish consumers more choice in how they manage their mortgages. This type of mortgage is already very popular across Europe, and we are pleased to be the first lender to bring this to Ireland.”
Who Could Benefit from the Flex Mortgage?
The Flex Mortgage could appeal to borrowers who:
- Expect interest rates to fall and want to take advantage of lower rates.
- Want the option to overpay their mortgage without penalties.
- Prefer an adjustable rate over a long-term fixed rate for more flexibility.
However, it may not be ideal for those who prefer absolute certainty over their mortgage payments. Since rates adjust annually, borrowers need to be comfortable with potential fluctuations in their repayments.
What This Means for the Irish Mortgage Market
Avant Money’s move is significant for two reasons:
- First International Bank to Enter Retail Banking Since 2005 – As part of Bankinter’s expansion into Ireland, Avant Money is set to become a fully-fledged bank branch in Ireland next month. This is the first time a traditional overseas lender has entered the market in nearly two decades.
- Increased Competition Among Lenders – With fewer banks operating in Ireland after the exits of Ulster Bank and KBC, competition has been somewhat limited. The Flex Mortgage could push other lenders to introduce similar innovative mortgage products.
Final Thoughts – Is This a Game Changer?
The return of tracker-style mortgages in Ireland is a notable shift, though it’s clear that the Flex Mortgage is not identical to the pre-2008 trackers. Instead, it introduces a structured, transparent alternative for borrowers who want flexibility without the unpredictability of standard variable rates.
With interest rates expected to fluctuate in the coming years, this mortgage may suit those willing to take on a degree of risk in exchange for potential savings. However, as always, borrowers should carefully weigh their options before committing to a long-term financial decision.
Seeking professional advice can help you determine whether a flexible, Euribor-linked mortgage is the right choice for your financial future, so schedule a consultation today and speak to one of our experienced financial advisors! We’ll help you understand your options and make the best financial decisions for 2025 and beyond.
Author: Fran Cooke
