Bank of Ireland pulls plug on non-resident mortgage market

Bank of Ireland has stopped offering expat, or non-resident, mortgages to Irish people living overseas who are looking to buy a property back home. The move means that the market for mortgages for Irish living overseas has shrunk substantially, with AIB now the dominant player.

According to a spokesman, the bank stopped offering expat mortgages earlier this year, and will now process mortgages only for customers resident in the Republic of Ireland at the time of their application.

“Non-resident mortgages was a very small proportion of our book, and our main focus is on first-time buyers, movers and more recently our re-entry to the broker market,” he said.

The move means those hoping to secure a property while living abroad will now have substantially less choice.

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Non-resident mortgages have grown in popularity in recent years as the wave of emigrants who left Ireland during the downturn started to think about their return home. With rents soaring across the country, and applicants precluded from applying for a mortgage for at least six months once they return home, many emigrants have moved to buy a home while still living overseas, with a view to renting it out until they return.

Restricted lending

Lending to the Irish overseas became more complicated following the introduction of the EU Mortgage Credit Directive in 2016, which restricted lending in foreign currencies.

The directive requires lenders to monitor exchange-rate fluctuations on foreign currency mortgages, meaning some banks won't even consider lending to people who don't earn their income in euro. Permanent TSB, for example, will only lend to people earning euro, which precludes those living in Australia, Canada, the Middle East and the UK, for example.

Bank of Ireland, however, had been one of the main players in this market, and had been open to lending to applicants based outside the euro zone. It typically requested applicants to have a deposit of 30 per cent, and looked for applicants with a minimum income of €75,000 for an individual and €125,000 for joint applicants. It also levied buy-to-let rates, which are substantially higher than rates for borrowing a family home,

The departure of Bank of Ireland means AIB, and its broker arm Haven, is now the main player in the space, with Permanent TSB only lending in the euro zone and Ulster Bank considering it on a case-by-case basis.