Avant Money has announced the launch of a variable mortgage product similar to a tracker mortgage.

Rates for Avant's Flex Mortgage will be linked the 12-month Euro Interbank Offered Rate (Euribor), a benchmark that reflects inter-bank lending costs across Europe.

Flex Mortgage will be available to new and existing customers from April directly through Avant Money and select mortgage brokers, with rates starting from 3.31%.

Customers will have the option to make unlimited overpayments and repay their mortgage in full at any time, without early exit fees.

Avant said that unlike standard variable rate mortgages, where the lender determines when to adjust rates, the Flex Mortgage fully aligns with the Euribor.

The customer's interest rate is set on the day of drawdown and adjusted annually based on the 12-month Euribor market rates.

"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," said Brian Lande, head of mortgages at Avant Money.

"The Flex Mortgage compliments the existing range of Avant Money mortgages where borrowers can now choose the flexibility of a variable rate, greater certainty from a 3 to 10 year fixed-rate or the complete certainty of repayment that is offered by the One Mortgage, where the rate is set for the full life of the mortgage.

"This latest product is part of our continued commitment to deliver better, more flexible mortgage solutions that meet the evolving needs of homeowners."

Martina Hennessy, managing director of broker Doddl.ie, said that Avant had actively driven change in the mortgage market, which has not offered tracker mortgages since the crash.

"Since 2008, Irish mortgage consumers have had just two options – fixed or variable rates, with variable rates set at the lender’s discretion and often uncompetitive,” said Hennessy.

“The new Avant Money Flex Mortgage brings greater transparency to variable rates by setting a clear fixed margin to the published Euribor rates, allowing borrowers to track and monitor their rate with confidence."

"The timing of this launch is significant," she added. "The Euribor rate is currently trending low, allowing Avant to price this product competitively.

"Homeowners with more than 20% equity can secure a 3.31% rate, which is considerably lower than many other variable rate offerings."

"The Euribor rate is reviewed annually, providing more stability than a tracker mortgage, which adjusts within 30 days of an ECB rate change."

The Euribor currently stands at 2.41%, and the Flex Mortgage will be available at 3.31% for homeowners with a loan to value of less than 80% and 3.51% for borrowers with a LTV of higher than 80%.

The Avant Flex Mortgage is 0.64 percentage points lower than the best standard variable rate available and 2.39 points lower than the highest rate of 5.9%, according to Doddl.ie.

“The savings are substantial,” said Hennessy. “A €350,000 mortgage over 30 years could save homeowners €502 per month, or €6,000 per year, for LTVs over 80%.

“For those with 20% or more equity, savings could reach €496 per month compared to existing market rates."

The average interest rate on a new mortgage in January was 3.82%, according to the Central Bank.

Photo: Niall Corbett, CEO of Avant Money.