Monday 21 May 2018

Ulster Bank kicks off new mortgage war with string of cuts to fixed rates

Stock image
Stock image

Charlie Weston Personal Finance Editor

Ulster Bank has kicked off a new round of mortgage wars with a string of cuts to its fixed mortgage rates.

The leading lender has ramped up pressure on its rivals by reducing its five-year fixed rates and by making it easier to qualify for its market-leading, four-year rate of 2.6pc.

The move comes as borrowers have been advised to consider locking in to fixed rates after the European Central Bank hinted it could soon raise its key rate.

It also comes as Central Bank figures show more than half of those taking out a mortgage in January opted for fixed rates.

Karl Deeter
Karl Deeter

Banks have mainly been competing with each other on fixed rates.

The Central Bank said the average one to three-year fixed rate fell by 0.19pc over the past year to 3.08pc in January.

But Irish borrowers are still paying more than their counterparts in the rest of the eurozone.

Now Ulster Bank is reducing a number of its fixed rate mortgages.

Its five-year fixed rates will now range from 2.8pc to 2.99pc. This is down from 2.90pc to 3.75pc.

The lower rates are for those with higher deposits, or more equity built up in their homes.

Ulster has also reduced its four-year fixed rate for customers with 90pc loan to value to 2.85pc.

This is down from 2.99pc.

The bank has also removed any minimum borrowing threshold on its Loyalty Plus rates.

This includes the market-leading 2.6pc four-year rate for those with a loan to value of up to 80pc.

The new rates take effect from next week.

Karl Deeter, of Irish Mortgage Brokers, welcomed the new phase in the fixed-rate price war.

"Ulster Bank's rates are already market leaders. The four-year fixed rate is the best there is.

"This is great news that the rate is being made available to more people, especially if you want to refinance from another bank."

Mark Whelan, of price comparison site Bonkers.ie, said the figures from the Central Bank showing that most new mortgage agreements in January had fixed rates shows that certainty and peace of mind is becoming increasingly important for Irish borrowers.

The ECB has kept its key lending rate at 0pc for two years now, but there are indications that it is about to change course in a move that is set to cost householders thousands of euro.

A 0.5pc rise will add almost €100 a month to the repayments on a €300,000 mortgage.

People on variables would be wise to consider fixing now before rates rise. Those already on fixed rates will not be affected, while tracker customers should do nothing, Mr Deeter added.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business