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Price war as lenders drop rates for mortgages


More people are buying houses online

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A price war has broken out between the country’s top lenders with new lower mortgage rates being offered to first time buyers.

Bank of Ireland said it will cut its mortgage rates for new customers, and reduce some fixed rates only for existing variable-rate customers.

The move comes as Permanent TSB revealed it is making a major play for new mortgage business by cutting its rates to some of the cheapest in the market.

And last October AIB cut it variable rates – for both existing and new customers.

The announcements come as reports show house prices are easing while the Central Bank makes plans to tighten rules for new mortgage holders.

The new rates from Bank of Ireland will mean new borrowers who have a deposit of 40pc of the property’s value will get a rate of 3.9pc. Those with smaller deposits will get a rate of 4.50pc for new borrowings.

For existing mortgage holders who are with the bank, there are cuts in the fixed rates. But no cuts in the variable rate for existing customers.

The bank said it had launched a new €2.5bn mortgage fund, and was extending its offer to pay the stamp duty for new buyers until the end of this year.

Aine McCleary, Head of Mortgages of Bank of Ireland, said the lender wants to provide valuable options to new and existing customers.

“We are introducing a highly competitive, wide range of two, three, five, and ten year fixed rates based on the property’s current Loan to Valuation ratio (LTV), available to new and existing home owner customers on receipt of an up to date property valuation,” she said.

Meanwhile, Permanent TSB bank said it will reduce its interest on variable interest-rate mortgages for new customers by between 0.36pc and 0.42pc.

Under the plan, the PTSB-managed variable rate for new mortgage customers will be 3.76pc - down 0.36pc on the current managed variable rate where the loan is 50pc or less of the value of the house.

Where the mortgage is between 50pc and 60pc of the house value, the rate will be cut from 4.15pc to 3.8pc, while loan-to-value ratios of between 60pc and 70pc will see a new rate of 3.9pc, compared with 4.25pc.

The managed variable rate for customers whose loan is between 70pc and 80pc of the value of the house will see a cut of 0.42pc to an APR of 4.07pc.

The changes will come into effect from January 12.

Similar interest rates from AIB range between 3.85pc and 4.25pc.

PTSB's head of mortgages Richard Kelly said the new rates "highlighted Permanent TSB's position as a strong competitive force in the mortgage market".

"We have grown our market share to 13pc over the past two years and we are determined to continue that momentum into 2015. These new rates show that Permanent TSB is bringing real competition to the mortgage market and we will continue to provide mortgage credit to those customers who demonstrate affordability and are credit worthy," he added.

The bank has also announced a series of cuts to its fixed-rate mortgages for new residential customers.

Online Editors