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Bank offers new mortgage customers €1,500

Ulster Bank will compete aggressively for mortgage business by offering €1,500 toward the costs of those who take out a home loan.

The bank plans to target pillar banks AIB and Bank of Ireland in an attempt to grow its mortgage business.

It comes just weeks after Ulster Bank cut its variable and a number of fixed rates.

The €1,500 contribution toward the legal fees of those taking out a mortgage applies to both first-time buyers and mortgage holders switching from other banks.

The deal, to be announced today, is available to those who have a mortgage offer from today until June 13.

Switchers are now attractive again to banks, due to Central Bank loan restrictions that have prompted lenders to try to "cannibalise" each other's mortgage customers. Mortgage experts said the latest move came after a string of banks cut lending rates in the past few months.

However, only Ulster Bank and AIB/EBS cut their lending rates for existing variable-rate customers.

Bank of Ireland and Permanent TSB cut the variable and loan-to-value rates for new customers only. KBC Bank had cut new lending rates only, but last week introduced new reduced fixed rates which are also open to new customers.

Banks are also competing hard for new mortgage business by offering incentives.

Bank of Ireland is understood to be picking up large volumes of business by paying new mortgage customers 1pc of the value of the mortgage, with the bank saying this is to cover stamp duty. It recently extended the offer to switchers. The incentive is worth €2,000 on a €200,000 mortgage.

Permanent TSB offers €1,000 towards the legal fees of new mortgage customers.

KBC Bank is offering to pay half of the first year's home insurance for new buyers and switchers. It also offers a 0.2pc interest rate discount for the life of the mortgage for those who open a current account with it.

Ulster Bank's head of branch banking Jim Ryan said it was also launching mobile mortgage managers who will visit customers outside branches.

He said its interest rates were now among the lowest in the market, with some as low as 3.7pc.

Irish Independent