Sunday 11 December 2016

New blow for homeowners as Ulster Bank hikes fixed rates

Charlie Weston Personal Finance Editor

Published 22/02/2011 | 05:00

Ulster Bank, which will up its variable rate by 0.5pc to 4.35pc on March 1, has raised its two-year fixed rate by 0.6pc to 4.8pc. Its three-year rate has gone up by 0.8pc, to 5.1pc. Photo: Getty Images
Ulster Bank, which will up its variable rate by 0.5pc to 4.35pc on March 1, has raised its two-year fixed rate by 0.6pc to 4.8pc. Its three-year rate has gone up by 0.8pc, to 5.1pc. Photo: Getty Images

ULSTER Bank has hiked its fixed rates by up to 0.8pc, as more banks try to discourage homeowners from opting for the safety of set monthly repayments.

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This follows increases in fixed rates by KBC Bank and Permanent TSB, with EBS suspending the option for homeowners of fixing.

Ulster Bank, which will up its variable rate by 0.5pc to 4.35pc on March 1, has raised its two-year fixed rate by 0.6pc to 4.8pc. Its three-year rate has gone up by 0.8pc, to 5.1pc.

It does not offer fixed rates for five years or longer.

And Permanent TSB has issued a new set of fixed rates for new customers which are up to 4.5pc cheaper than the bank will offer an existing customer.

It has told brokers it will give new customers a fixed rate of 4.5pc for 10 years, but existing customers who qualify for a fixed rate are being charged up to 9.1pc over the same period.

For new customers who want to fix for five years, the rate is 3.70pc, compared with 8.75pc for existing clients.

However, the new customer rates only apply to those who are borrowing less than half the value of their home.

Borrowers

In other words, a deposit of 50pc of the property value would be needed.

The fixed rates for existing borrowers only apply to those who are coming to the end of an existing fixed rate, or the end of an introductory rate, and have to be offered a new fixed rate.

Permanent TSB customers already on existing fixed rates will not be affected by the changes.

Asked if it was committed to having fixed rates, a spokesman for Permanent TSB said the bank was monitoring the situation and may withdraw fixed rates at any point.

Irish Mortgage Brokers director Karl Deeter said the bank was effectively now out of the fixed-rate market, as new customers could only get a fixed rate if they were borrowing less than half of the value of the home.

He added that only a small number of existing borrowers would qualify for a fixed rate, but with the rates so high nobody would take them up.

The mortgage market has been rocked this year by fixed- rate rises by KBC.

EBS has upped its variable rate by 0.6pc and closed off the option for mortgage holders of fixing.

Permanent TSB has already hiked its variable rate by 1pc to 5.19pc. And Irish Nationwide has been told by the High Court to stop issuing mortgages.

AIB and Bank of Ireland are expected to increase variable and fixed rates after the election.

Meanwhile, those with tracker mortgages were warned last week that the European Central Bank rates would rise between five and six times by the end of next year.

This would mean ECB rates going to around 2.5pc -- a move that would also affect variable rate mortgages.

Irish Independent

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