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Saturday 10 December 2016

Ulster Bank lowers rates for those with equity in homes

Published 11/08/2016 | 02:30

Ulster Bank has calculated that the new 2.99pc rate would save €157 a month for a switcher customer with a €200,000 mortgage over 20 years that is currently on a variable rate of 4.5pc (Stock photo)
Ulster Bank has calculated that the new 2.99pc rate would save €157 a month for a switcher customer with a €200,000 mortgage over 20 years that is currently on a variable rate of 4.5pc (Stock photo)

Ulster Bank is to introduce lower mortgage rates for those who have equity in their homes.

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The move will put pressure on other lenders to continue to lower their variable and fixed rates, as most rates are still considered to be very high.

The new Ulster Bank rates will apply to both new and existing customers.

The bank will have one of the lowest three-year fixed rates in the market at 2.99pc. It applies to those with a loan-to-value (LTV) of up to 80pc.

This means people with a mortgage that is at least 20pc less than the property's value will qualify for the new rate, which is down from 3.2pc.

Banks have increasingly moved to pricing mortgages based on the equity in homes by offering so-called LTV mortgages. More equity means a lower rate, as there is less risk for the lender.

Ulster Bank has calculated that the new 2.99pc rate would save €157 a month for a switcher customer with a €200,000 mortgage over 20 years that is currently on a variable rate of 4.5pc.

The bank is also reducing its variable rate for those with a loan to value of up to 80pc, the Irish Independent has learned.

It is going down from 3.2pc to 3.1pc as part of a new suite of loan rates that the bank is calling 'Loyalty'. This compares with the bank's standard variable rate of 4.3pc.

Market

For those who do not have equity in their home, the bank is introducing a new three-year rate of 3.2pc, which is it calling 'Loyalty Premium'.

This only applies to those who have their salary mandated to Ulster Bank and have a minimum loan of €350,000.

There is a new Variable Loyalty Premium rate of 3.5pc for those who have their salary paid into the bank and have a minimum loan balance of €350,000.

The bank is also launching video conferencing for customers. The new TokBox technology will allow mortgage customers to take part in a video conference with the bank on their phone, tablet or computer.

Ulster Bank's director of customer experience and products, Maeve McMahon, said the bank already offered €1,500 to go towards legal fees and a free valuation for new buyers and switchers.

She explained: "The three-year fixed rate of 2.99pc, the lowest on the market, and the reduced Loyalty variable rate of 3.1pc are both available to new and existing customers."

The move by Ulster Bank comes weeks after new lender Pepper reduced its rates by up to 0.45pc.

The Australian-owned firm started lending here at the start of the year. Its new variable rates are now as low as 3.1pc, one of the lowest on the market.

This rate applies to new buyers who are borrowing 50pc or less of the value of the property.

A lender hoping to shake up the market, Frank Money, is still awaiting authorisation from the Central Bank to begin issuing mortgages.

Irish Independent

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