Ulster Bank mortgage customers get low-cost fixed option
Ulster Bank is offering its existing mortgage holders the option of locking into new fixed rates that are much lower than its variable rate.
The new rates vary depending on the amount owed on the mortgage and the current value of the home.
The new fixed rates have been reduced by 0.35 percentage points, which means that some of the new rates are a full one percentage point lower than its variable rate, the Irish Independent has learned.
The bank is not cutting its variable rate, but the new rates apply to new and existing customers and are available from July 17.
Existing customers can also opt to stay on a variable, but go for a recently launched low-priced LTV (loan-to-value) variant if they have equity built up in their home.
With a fixed rate you are locked in for the term of the deal, and have to pay a penalty to come out early.
The lowest fixed rate will now be 3.3pc for three years, and applies to those who owe 60pc or less on their mortgage than their property is worth.
For those who owe 80pc or less on their mortgage than the property's value, the rate is 3.55pc.
Ulster Bank director of customer experience and products Maeve McMahon said the new fixed rates were the lowest on the market.
"These new market-leading fixed rates are providing us with a fantastic opportunity to help more customers buy their dream home, or save money on their existing deal by changing rate or switching to us."
A customer who has a lot of equity in their home and moves from the variable rate to the new three-year fixed rate of 3.3pc could save almost €1,900 a year, Ms McMahon said.
Mortgage holders can opt to stay on the bank's variable rate but benefit from a lower rate if they have equity built up in their home.
An existing customer with a mortgage that is 60pc of the value of the home or less can get a rate of 3.8pc.
The bank boss said if this family had a €300,000 mortgage, they would save €951 in a year by moving from the bank's 4.3pc variable.
Ulster Bank reduced its variable rate in February.
None of the six banks that were hauled into Finance Minister Michael Noonan's office have cut their variable rates since the meetings.
Permanent TSB this week offered to allow existing customers to move to what it calls managed variable rates, which mean lower interest charges for those who owe less, relative to the property's value.
KBC Bank has launched new, lower fixed rates for existing customers, but is offering even lower rates for new customers.
AIB announced a cut in variable rates in May, and Bank of Ireland has reduced its fixed rates. There has been no response from ACC.