The Irish financial landscape is undergoing a significant transformation as new players enter the deposit market, creating unprecedented opportunities for both savers and mortgage borrowers. Avant Money, the Irish subsidiary of Spanish banking giant Bankinter, has recently expanded its soft launch of deposit products, signaling a major shift in the competitive dynamics of Ireland’s banking sector. With €170 billion sitting in Irish bank accounts, predominantly earning minimal interest, this dormant capital represents a substantial opportunity for financial institutions seeking funding for their mortgage portfolios. The introduction of competitive deposit rates comes at a pivotal moment when the European Central Bank’s interest rate trajectory appears poised for potential increases, creating a perfect storm of opportunity for consumers who have endured years of minimal returns on their savings.
Avant Money’s deposit offerings—featuring a one-year fixed-term account at 2.3% and a six-month account at 2.6%—may seem modest in isolation, but they represent a significant departure from the standard rates offered by traditional Irish banks. These rates, while not market-leading, establish a new benchmark in an environment where most savings accounts have offered returns barely above zero. For savers who have watched their purchasing power erode through inflation while their deposits earned negligible interest, these rates offer a glimmer of hope. More importantly, the competitive pressure exerted by Avant could force established institutions to reevaluate their savings offerings, potentially triggering a broader rate increase across the Irish banking sector.
The strategic importance of deposit gathering for mortgage lenders cannot be overstated. With a loan book that has grown by 20% to €4.4 billion, primarily through mortgage lending, Avant Money requires stable, low-cost funding to maintain its competitive edge in the mortgage market. By attracting deposits, the bank can reduce its reliance on wholesale funding markets, which tend to be more volatile and expensive. This funding strategy creates a virtuous cycle: competitive deposit rates attract customers, providing cheaper funding that allows the lender to offer more attractive mortgage rates. For mortgage borrowers, this could translate into better long-term financing options as lenders become more efficient at funding their loan portfolios through customer deposits rather than external capital markets.
The sheer scale of Ireland’s deposit market—approximately €170 billion according to Central Bank data—presents an enormous opportunity for financial institutions. What makes this figure particularly compelling is that over 85% of these deposits reside in current and on-demand accounts that earn little to no interest. This represents a massive pool of capital that could potentially be redirected toward higher-yielding fixed-term accounts or other savings vehicles. For homeowners and prospective buyers, this means that the banking sector’s focus on attracting these dormant deposits could intensify, leading to more competitive savings rates and potentially more favorable mortgage conditions. As banks compete for these deposits, they may need to offer increasingly attractive terms, benefiting both savers and borrowers in the process.
The competitive landscape is rapidly evolving beyond Avant Money. MoCo, the Irish arm of Austrian bank Bawag, has already expanded its product offerings beyond mortgages with the introduction of an easy-access savings account. Similarly, UK digital banking group Monzo has received authorization from the Central Bank and ECB to operate in Ireland, with plans to offer savings accounts to Irish consumers. This influx of new players into the Irish deposit market signals a fundamental shift in banking competition, moving away from the traditional dominance of established Irish banks. For mortgage professionals and consumers alike, this increased competition promises more choice, better rates, and potentially more innovative financial products tailored to specific needs.
The European Central Bank’s monetary policy trajectory adds another layer of complexity to this evolving banking landscape. Having cut the deposit rate from 4% to 2% over a 13-month period ending in June, financial markets are now increasingly pricing in potential rate increases in the near future. This shift in sentiment could have profound implications for both deposit and mortgage rates. For mortgage borrowers, particularly those with variable rate products or those coming off fixed terms, rising ECB rates could translate into higher monthly payments. However, the increased competition for deposits may partially offset this effect, as banks strive to maintain their deposit funding bases despite potentially higher wholesale funding costs. The interplay between these competing factors will be crucial in determining the direction of mortgage rates in 2026.
The growing competition for deposits could ultimately benefit mortgage borrowers in several significant ways. As banks vie for customer deposits, they may be forced to offer more attractive mortgage terms to maintain their competitive position. This could manifest as lower interest rates, reduced fees, or more flexible lending criteria. Additionally, the increased availability of competitively priced deposits gives lenders more stable funding, allowing them to offer longer-term fixed-rate mortgages at more competitive rates. For homeowners considering refinancing or prospective buyers entering the market, this competitive environment presents an opportunity to secure more favorable financing terms than might have been possible just a few years ago. The key will be timing and understanding how these market dynamics translate into specific mortgage products.
Homeowners with existing mortgages should carefully consider their position in light of these market developments. Those with variable rate mortgages may want to monitor the competitive landscape closely, as increased deposit competition could potentially limit the extent to which lenders pass on ECB rate increases. Homeowners approaching the end of a fixed-rate term should begin exploring refinancing options well in advance, as the competitive environment may offer more attractive rates than previously available. Additionally, homeowners with significant savings sitting in low-interest accounts should consider reallocating some of these funds to higher-yield options, taking advantage of the emerging competition in the deposit market while simultaneously strengthening their financial position against potential future rate increases.
Savers stand to benefit substantially from the increasing competition in the Irish deposit market. The traditional approach of keeping emergency funds and excess cash in current accounts earning minimal interest is becoming increasingly untenable. Savers should explore the various fixed-term and flexible savings options now available, comparing rates across multiple institutions. The introduction of digital banks like Monzo promises additional innovation in savings products, potentially offering features that traditional banks have been slow to implement. For those with specific savings goals—whether for a home deposit, home improvement, or other financial objectives—the competitive environment offers an opportunity to earn meaningful returns while maintaining appropriate liquidity and risk profiles based on individual time horizons and risk tolerances.
The long-term trends in Irish banking and mortgage finance point toward a more diverse and competitive sector. The entry of international players with different business models and funding strategies challenges the status quo established by traditional Irish banks. This diversification benefits consumers through increased choice and innovation. Over the next several years, we can expect to see more specialized mortgage products, potentially better rates for different borrower profiles, and more sophisticated digital banking experiences. For mortgage professionals, this evolution presents both challenges and opportunities—requiring continuous education about new products and lenders while also providing more options to better serve client needs. The Irish mortgage market appears poised to become more dynamic and responsive to consumer demands.
Mortgage professionals can better serve their clients by developing a comprehensive understanding of the evolving competitive landscape. This includes familiarizing themselves with the deposit strategies of various lenders, as these funding approaches often influence mortgage pricing and availability. Advisors should educate clients about the relationship between deposit rates and mortgage rates, helping them make informed decisions about both savings and borrowing strategies. Additionally, professionals should stay attuned to the entry of new market players and the innovative products they introduce, as these may offer unique advantages for specific client profiles. By maintaining a broad view of the entire financial ecosystem—rather than focusing solely on mortgage products—advisors can provide more holistic financial guidance that addresses both borrowing and saving needs.
For homeowners and prospective buyers navigating this changing financial landscape, several actionable steps can optimize their position. First, regularly review your mortgage terms and compare them with current market offerings—consider refinancing if significant savings potential exists. Second, reassess your savings strategy, moving funds from low-interest accounts to more competitive options that align with your liquidity needs. Third, maintain a strong credit profile, as this will become increasingly important as lenders compete more aggressively for quality borrowers. Fourth, consider the timing of major financial decisions in light of potential ECB rate movements and deposit competition cycles. Finally, develop a comprehensive financial plan that coordinates your mortgage, savings, and investment strategies to maximize overall financial health and resilience in an evolving interest rate environment.
