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Ulster Bank to slash mortgage rates for low-risk borrowers


Ulster Bank headquarters

Ulster Bank headquarters

Ulster Bank headquarters

ULSTER Bank is to lower its mortgage rates for low-risk borrowers.

The new rates will apply to new and existing mortgage holders.

The reductions will see some mortgage holders paying a variable rate of just 3.5pc, one of the lowest in the market.

The bank is to also announce that it is introducing a special fixed rate of just 3.2pc for those who meet certain criteria.

The moves come just days after KBC Bank said it was cutting its rates, effective from next week, but its reductions only apply to new customers.

And AIB, and its subsidiary EBS, are due to reduce variable rates for new and established customers from next month, the third cut in 18 months.

Ulster Bank is cutting its variable rate by 0.3pc to just 3.5pc for existing borrowers whose mortgage is 60pc or less than the value of the home - this is a so-called LTV (loan-to-value) variable rate.

The bank is also offering a 0.2pc cut in its 80pc LTV rate to 3.7pc, with all the new rates available immediately.

Also being introduced is a new market-leading 3.2pc three-year fixed rate. To get this, a new or established homeowner must be borrowing at least €250,000, have an 80pc or lower loan to value, and open an Ulster Bank current account.

Mortgage expert Michael Dowling, of Abacus Finance in Dublin, said the new three-year fixed rate was the lowest in the market.

He added that Ulster Bank's latest variable and fixed-rate reductions could force other lenders to respond.

"The onus is on Bank of Ireland to react. It's rates are out of sync at the moment."

Brendan Burgess of the Fair Mortgage Rates Campaign welcomed the cuts, and Ulster Bank's renewed commitment to making the new rates available to existing customers also. 

"It's curious that, at the bottom of the European Central Bank interest rate cycle, fixed rates are 0.5pc lower than variable rates.

"This suggests that Ulster Bank is expecting the variable rate to be cut further in the coming months, which is good news.  I am still recommending that borrowers should not fix until fixed rates fall below 3pc," Mr Burgess said.

Maeve McMahon, Ulster Bank’s director of customer experience and products, said the bank was growing its mortgage business.

"We’ve seen a significant uplift across our mortgage offering, with 56pc growth this year both from customers buying a new home and those looking to get the best value rates available."

Finance Minister Michael Noonan is set to again meet with all the banks before the October Budget.

It follows meetings in May when he demanded lower variable rates for existing customers, in line with lower costs of wholesale bank funding