Ulster Bank to withdraw broker mortgage sales
Lenders turn up the heat on home loans by raising rates across the board
ULSTER Bank is to stop selling mortgages through brokers and focus its homeloan sales through its 131 branches, in a bid to entice customers to buy other products as well.
And in a dramatic day of rates rises, it also emerged that Permanent TSB is increasing the rates it will charge on new loans by up to 0.45pc, withdrawing one of its most popular switcher products and will no longer pay legal fees for switchers.
Also yesterday, IIB Homeloans said it was increasing its standard variable rate by 0.10pc, and is likely to increase the margin on its new business tracker rate next week.
Next week, AIB is likely to withdraw a highly competitive one-year discount product for first-time buyers.
Subprime lenders, Start Mortgages and GE Money, have tightened up on the amount of money they will loan out. The two lenders will only loan out 80pc of the value of the home, instead of up to 92pc now.
Royal Bank of Scotland-owned Ulster Bank told brokers yesterday that from the end of May it is withdrawing from the mortgage broker market.
In the communication, the bank said: "Over the past three years, our branch network has grown significantly with the addition of 10 new branches, bringing our total number of branches to 131 in the Republic of Ireland."
Brokers argue that it is cheaper for banks to sell mortgages through an intermediary as it saves on overheads.
But it is understood Ulster Bank wants to attract mortgage business into its branches so it can cross-sell customers other high-margin products, like credit cards and overdrafts.
The move comes just months after Ulster cut the commissions it pays brokers from 1pc to 0.5pc. And in the past few days, Ulster increased the rates it charges on its trackers for new business by between 0.35pc and 0.40pc.
Other banks to increase their rates in the past few days include Ulster's sister bank First Active and Bank of Scotland (Ireland).
Head of the largest mortgage broker association, the Professional Insurance Brokers Association (PIBA), Jack FitzPatrick said the Ulster Bank move was bad for consumers as it would reduce choice in the market.
Permanent TSB said it was increasing its tracker rates for new lenders by 0.45pc.
The new rates will mean someone on a loan to value of less (LTV) than 80pc will be offered a rate 5.25pc, and a greater than 80pc LTV will be 5.5pc.
However, new borrowers will get a one-year discount of 0.2pc. The bank is to honour loan applications in the pipeline for the next six weeks.