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Tuesday 20 November 2018

Mortgage price war? Ulster Bank ups ante over home loans with 2.3pc rate

Cuts bring costs a step closer to other EU countries

File photo
File photo
Charlie Weston

Charlie Weston

The prospect of continental-style low mortgage rates has moved a step closer with new rate cuts by a leading lender.

Ulster Bank has introduced a 2.3pc two-year fixed rate, cut its seven-year rate and opened up its market-leading four-year rate to all borrowers.

The reduced rates apply to new and existing customers.

Mortgage rates here, particularly variable ones, are the highest in the eurozone, which was first exposed in this newspaper four years ago. Home-loan lending rates here are almost double those in the rest of the euro currency area.

But a mortgage war over the past two years has seen lending costs in this country come down dramatically.

Ulster Bank has now put it up to its rivals with the new 2.3pc two-year rate, which is available to all borrowers, irrespective of how much equity their have in their homes, or how big their mortgage deposit.

Photo: PA
Photo: PA

Most low rates are restricted to those with low loan to values.

The new two-year rate will mean a customer with a €300,000 mortgage over 20 years on a variable rate of 4.3pc will save €305 a month. Over a year this works out at a saving of €3,660 by switching to the new two-year fixed rate of 2.3pc.

It has reduced its seven-year rate by 0.3pc. These will now be between 2.99pc and 3.29pc, with the rate depending on the level of borrowings relative to the property's value, also known as the loan to value.

Ulster Bank has also opened up its four-year rate of 2.6pc to all borrowers. Up to now you had to have a deposit of at least 20pc, or owe 20pc less on your mortgage than the house was worth. Ulster said it would now have the lowest two, four and seven-year fixed rates.

There is no reduction in the variable rate of 4.3pc, but the bank argues that most new borrowers are opting for fixed rates, with large numbers of existing customers who do not have a tracker also choosing to fix.

The bank will continue to offer new customers a contribution of €1,500 towards legal fees, free valuations for those who want to get a lower rate based on the loan to value, and 50pc off home insurance.

Ulster Bank head of customer experience and products Damien Daly said: "Offering the cheapest fixed rates in Ireland is just that. It's actual support for customers at one of the most crucial financial moments in their lives."

Mortgage broker Michael Dowling said the cuts by Ulster Bank would be attractive for first-time buyers. "There is no doubt about it, we are getting down to continental rates."

He advised new and existing mortgage holders to consider fixed rates as European wholesale rates are due to rise, possibly from next year.

Meanwhile, the number of people approved for a mortgage across all lenders shot up in May, topping €1bn for the first time since 2011.

A total of 4,473 mortgages were approved in the month, with almost half granted to first-time buyers, a rise of 10pc.

Mover-purchasers accounted for 1,206 mortgage approvals, according to the Banking and Payments Federation.

The average value of approved mortgages in May was €237,000.

Irish Independent

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