Superquinn is now providing some of the cheapest mortgages in the state, particularly for fixed rates.
Superquinn's new bank, Tusa, a joint venture between the supermarket and TSB Bank, is offering far cheaper mortgages than its parent company and has positioned itself just below the usual cheapest lender, EBS, for its variable and fixed rates.
EBS is unlikely to cut its rates in reaction to the move and will continue to point to its record in terms of long-term mortgage value. Indeed, observers point out that the newcomer has no track record and there may be a question about how long this sort of value will be on offer.
Tusa is now operating out of five Superquinn outlets but will be extended to all by the end of next year. So far, Tusa has opened outlets in Knocklyon, Blanchardstown, Dundalk and Clonmel.
According to Tusa chief executive, Brian O'Mahony, it is encouraging customers to focus on the lifetime cost of borrowing and is thus focussing on APRs. Tusa does have the lowest APR at 3.8 per cent on a variable of 3.75 per cent. This is set just marginally below EBS's 3.8 per cent.
The fixed rates are also competitive. The one year fix is 4.4 per cent compared with 4.5 per cent for EBS or 3.9 per cent for new customers.
The three year is 5.25 per cent compared with a far higher 5.5 per cent at EBS, while the five year is set at 5.8 per cent compared with 5.95 per cent at EBS.
The comparable rates are far higher at TSB itself - 4.9 per cent for a one year and 5.7 per cent for a three year while five year fixes cost as much as 6.2 per cent at TSB.
Mr O'Mahony also insists that there will be no difference even for one year products between new and existing customers. Of course, it is easy to say this when all your customers are by definition new. Indeed TSB maintains some of the widest differences between new and existing customers for different loans. Mr O'Mahony does say that this is a promise he will stick to.
Tusa is also highlighting the ability to split your mortgage between variable and fixed rate, although most of the lenders offer this facility but few actually promote it. According to Mr O'Mahony, TSB were attracted to Superquinn's service and quality ethos. Indeed it was Superquinn which approached TSB to set up the operation, he said.
Tusa is also offering the lowest rate on a credit card at 17.5 per cent APR. This will probably mean that MBNA will have to withdraw their advertisements. But observers would be hopeful that in the future competition will drive down these extraordinarily high rates to more realistic levels. Tusa is also offering current accounts, which it reckons will be the cornerstone of its business, ATMs, car loans and other services. Pensions and investments are expected shortly.
IT remains to be seen whether simply entering the market with the lowest rate by a very small margin will be enough to attract large volumes of customers. Certainly the current lenders are hoping not. Some are even questioning whether customers would feel like talking about a new loan while out shopping.
It is unclear whether or not this is true but certainly the face of Irish financial services is changing quickly and Tusa could very possibly prove very popular. Its 59-hour week, six day opening hours are also likely to appeal to dual earner couples with few hours to spare.
