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Mortgage war heats up as Ulster Bank offers €500 to switch lender

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BPFI chief executive Brian Hayes

BPFI chief executive Brian Hayes

BPFI chief executive Brian Hayes

The mortgage market was given a new boost after Ulster Bank said it would pay €500 to homeowners who move their current account to the bank when they switch their home loan to it.

The move comes after Spanish giant Bankinter said it was entering the market here in the autumn, and Permanent TSB announced cuts to mortgage rates.

Ulster Bank said the new cash bonus was in addition to the €1,500 towards legal fees it offers to mortgage switchers.

The €500 offer is only available until September 21 and customers have to use the Ulster Bank current account as their main day-to-day transactions account.

The new offer comes as figures for the overall mortgage market show there has been a sharp fall in the numbers of new mortgages drawn down in the April to June period.

Mortgage experts said the Ulster Bank move was a sign of greater competitive forces in a home-loan market scarred by the impact of the pandemic.

Switchers are attractive to lenders as they have a track record of payments and tend to be in steady employment.

Ulster Bank has the lowest single mortgage rate in the market at 2.2pc, fixed over five years, according to price comparison site Bonkers.ie. But this rate is only available for those borrowing at least €300,000 and who have loan to value that is 80pc or less.

The bank commissioned research which shows 53pc of mortgage holders said they had never thought about switching.

Another 32pc said they had thought about switching, but never actually went through with it.

It comes as Spanish banking giant Bankinter is to enter the Irish mortgage market in a move set to put massive pressure on existing lenders to slash their rates.

Meanwhile, there has been a sharp fall in the number of new mortgages drawn down in the April to June period.

Some 6,622 new mortgages to the value of €1.46bn were drawn down during the second quarter of this year.

This represents a fall of 35pc when compared with the same three-month period last year, according to the Banking and Payments Federation.

A total of 2,263 mortgages were approved in June.

This was up 20pc compared with May, but down almost 50pc when compared with the figures for June last year.

Banking and Payments Federation chief executive Brian Hayes said the figures show that mortgage draw-downs have held up relatively well in the second quarter of this year despite the overall downward trend and scale of disruption to the economy.

Irish Independent