Mortgage war heats up with banks' offer of cash to switch
The mortgage war is heating up again as Permanent TSB becomes the second bank to pay a cash lump sum to those who take out a home loan.
The move will match Bank of Ireland's popular offer of 2pc cashback on the value of the mortgage, the Irish Independent has learned.
Bank of Ireland has been hoovering up market share with its cashback offer, which pays €2,000 for every €100,000 borrowed.
Customers flocked to the bank - even though they would pay less over the life of their mortgage by opting for the likes of AIB or EBS, which have lower variable mortgage rates.
Now Permanent has decided to join in with the same cashback offer.
Permanent TSB will also up the ante by announcing that from next Monday it will reduce its variable rate for new buyers and switchers by 0.5pc for a year. The 2pc cashback offer means that on a mortgage of €300,000, the bank will pay €6,000 back to the customer.
Permanent TSB is promising that customers will get the money within 10 days of drawing down their mortgage.
Banks insist that despite the new incentives we are not witnessing a return to Celtic Tiger-type loose lending.
Permanent TSB said that strict lending criteria would continue to apply, including Central Bank deposit rules.
Mortgage expert Karl Deeter said: "Cashback is a crude tool to attract borrowers. It's the banking equivalent of a cheap cologne, but it works."
It is hoped that the move will spark further competition on mortgage rates this year.