Permanent TSB cuts rates as mortgage price war heats up
Mark Whelan
Staff Writer

Permanent TSB has cut a number of its fixed mortgage rates, hot on the heels of similar reductions from KBC and Ulster Bank.

There’s a mortgage rate war underway in Ireland. And this can only be good news for Irish borrowers.

Late last month, Ulster Bank got the ball rolling by introducing a range of cuts to its variable and fixed mortgage rates. KBC was the next bank to join the rate-cutting trend, when it trimmed a number of its fixed rates.

Permanent TSB’s rate cuts, which take effect today, mean there have now been three significant mortgage rates reductions in as many weeks.

What do Permanent TSB’s new rate cuts means for first-time buyers?

Permanent TSB’s mortgage rate cuts are good news for first-time buyers.

The bank has cut its 3-year fixed rate for first time buyers from 3.30% to 3.15% and cut its 5-year fixed rate from 3.40% to 3.25%.

Although a cut of 0.15% may not sound like much in isolation, it can add up to significant savings for borrowers over the lifetime of a loan.

A first-time buyer borrowing €270,000 at Permanent TSB’s previous rate of 3.30% over 30 years will have a monthly repayment of €1,182.

But a buyer borrowing €270,000 at the bank’s new rate of 3.15% will have a monthly repayment of €1,160. This is a saving of €22 a month, or €264 a year.

Over the lifetime of a 30-year loan, that adds up to an eye-watering €7,920 in savings.

Permanent TSB’s new rates will be among the most competitive in the Irish market, but don’t go far enough to make the bank a market-leader. Check out our piece on which bank has the best rates for first-time buyers to get an understanding of which lenders are offering the best value at the moment.

Permanent TSB has also extended its 2%+2% cashback offer until September.

With this offer, new borrowers will receive 2% cashback upfront, as well as 2% back in cash on every monthly repayment.

What about home movers?

First-time buyers aren't the only ones who could potentially benefit from Permanent TSB’s rate cuts.

The bank has also cut fixed rates for borrowers with a loan-to-value ratio of 60%-80% by 0.15%.

Borrowers with an LTV of 60%-80% can now get a 3-year fixed rate of 3.10% or a 5-year fixed rate of 3.20%.

Permanent TSB’s 2%+2% cashback offer is available to movers, as well as first-time buyers.

While cashback offers like this look very attractive at a glance, borrowers should consider the lifetime cost of the loan when comparing mortgage rates.

Mortgage rate war spells good news for borrowers

Irish borrowers are still paying much higher mortgage rates than our fellow Europeans, but it is good to see rates finally moving in the right direction.

The fact that there have been three rate cuts in as many weeks is a clear indicator that there’s a mortgage rate war underway, and it will now be very interesting to see how the likes of AIB and Bank of Ireland respond.

To take advantage of the new mortgage rate war, borrowers should compare all rates available on the market before committing to a bank.