Central Bank may delay Revolut plans to offer mortgages from early next year

The financial services firm, which has an estimated 2.7 million Irish customers, said it was aiming to start mortgage-lending here in the first half of next year.

Revolut is licensed in Lithuania and can provide credit here by “passporting” in on the back of its Lithuanian banking licence.

But financial experts said there was some confusion about what level of supervision the Central Bank of Ireland would impose on Revolut’s mortgage operations.

Some insisted the Central Bank would still need to be involved in overseeing any move to offer mortgages here, despite Revolut being regulated from Lithuania.

“We’re very keen to get mortgages launched next year in Ireland,” Revolut Europe chief executive Joe Heneghan has told The Irish Times.

“Our team is working very hard on it. I would probably say the first half of next year is realistic.

“The market is attractive.”

Such a move could shake up the market here where AIB, Bank of Ireland and PTSB issue 93pc of new mortgages between them.

Revolut already offers current accounts, loans, credit cards, motor insurance, savings accounts, investments and buy-now-pay-later loans.

Banking sources said Revolut would be unlikely to be able to undercut the ­market here on interest rates.

The source said the financial services firm was likely to be regulated by a combination of the Lithuanian Central Bank, the European Central Bank (ECB) and the Central Bank of Ireland.

Rules in place here, requiring mortgage lenders to put aside a set amount of capital when they issue a mortgage, are likely to apply to Revolut also.

“This means they will not be able to offer supersonic low mortgage rates,” the source said.

He added that these capital rules were seen as restrictive in this country and were in place as lenders encountered huge difficulties if they tried to ­repossess when the borrower was in default.

Broker Michael Dowling questioned if Revolut would be able to launch a mortgage product here by the first half of next year.

“There is a lot of work to be done for them to launch by then,” he said.

“Central Bank of Ireland approvals will be needed. There are regulatory hurdles to be overcome.”

It took new lenders Nua Mortgages and MoCo years to get Central Bank authorisation.

Mr Dowling said the Central Bank would need to see what Revolut was planning.

A Central Bank of Ireland spokesperson said it did not comment on the business plans for financial institutions or on any potential applications for authorisation from it.

It said that although Revolut’s main regulatory supervision was handled by the Lithuanian Central Bank, if the firm offered mortgages here then it would be required to abide by the Irish Consumer Protection Code and the Code of Conduct on Mortgage Arrears.

The Central Bank of Ireland had no comment when asked whether other regulatory rules in place for Irish mortgage providers, such as requirements on the amount of capital they had to put aside when issuing a mortgage, would apply to Revolut.

However, it is understood, rules for Irish mortgage providers on loan-to-deposit ratios and loan-to-values ratios would apply to Revolut too.

Revolut, when asked if it needed Central Bank of Ireland clearance to offer mortgages here, said: “Revolut is already approved to provide credit in Ireland, but, notwithstanding that, we always work very closely with the Central Bank of Ireland to ensure they are fully able to appraise our plans and we respect all of their feedback in building out any new offering.”

The financial services firm is likely to offer mortgages directly through its app, rather than through brokers.

But it said it was considering putting a call centre in place to help applicants and mortgage holders with queries, rather than requiring them to deal with its online chat support.

Given the complexity of mortgages, experts said having a manned phone support line in place was a key decision for the company.

Revolut has funds available to it for mortgage lending, which means it would not be depending on expensive money markets for European Central Bank financing.

Its €634m loan book at the end of last year only equates to around 3pc of its €20bn in customer deposits across Europe.

This is a problem that is bedevilling some lenders attempting to gain a foothold in the market.

Non-bank lenders ICS Mortgages and Finance Ireland are reliant on high-cost market funding, as are MoCo and newly authorised Nua Mortgages.

Credit unions have highly competitive rates, but are restricted by regulations on the amount of mortgage lending they can do.

The home-loan plans by Revolut come at a time when Avant Money, whose Spanish parent is Bankinter, has announced that its intention to launch a full banking service here soon.

Competition for our main banks from the likes of Bankinter and Revolut on home-loan lending may, in time, upend the traditional mortgage market here.