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Mortgages

Ulster Bank cuts mortgage rates for first-time buyers and movers

Mark Whelan

Mark Whelan

Former Head of Communications & Events

Ulster Bank has cut a range of its variable and fixed mortgage rates, as competition in the Irish mortgage market heats up.

Irish borrowers are still paying much higher mortgage rates than our European counterparts, but rates here are starting to fall. Finally.

Just last week, KBC announced a series of cuts to its variable and fixed rates and today, Ulster Bank has introduced a range of cuts of its own.

Here are the details.

What do Ulster Bank’s cuts mean for first-time buyers?

Ulster Bank has cut its variable rate for borrowers with a loan-to-value ratio of 90% from 3.70% to 3.60%.

A cut of 0.1% may not sound like much in isolation, but over the lifetime of a loan, it could add up to thousands of euro in savings.

For example, let’s say you are a first-time buyer borrowing €270,000 to buy a home for €300,000. And let’s say you have a loan to value ratio of 90% and are looking to repay your loan over 30 years.

At Ulster Bank’s previous rate of 3.70%, you would have paid €1,243 per month. So, €14,916 over the course of a year.

At the bank’s reduced rate of 3.60%, you would pay €1,228 per month, which is a saving of €15 a month, or €180 over the course of a year.

Since you’re borrowing for 30 years, Ulster Bank’s 0.1% cut could save you as much as €5,400 over the lifetime of your loan.

It’s important to note that these rates are available to Ulster Bank current account holders. The trend of banks reserving their best mortgage rates for their current account customers is nothing new and the best of KBC’s pending rate cuts will only be available to its current account holders too.

It could be wise for customers considering a mortgage to switch current accounts in order to avail of the best mortgage rates being offered by their lender of choice.

What changes are being made to Ulster Bank’s fixed rates?

Fixed rates are becoming more and more popular among Irish borrowers and Ulster Bank has responded to this new trend by cutting its three-, four- and five-year rates.

The bank’s three-year rate for first-time buyers has been cut from 3.20% to 2.90%, while its best four-year and five-year rates have been cut to 2.85% and 2.90%, respectively.

These rate cuts will make Ulster Bank the cheapest provider of three-, four- and five-year fixed rates for the time being.

How will Ulster Bank’s rate cuts affect movers?

Ulster Bank has cut its variable rate for customers with a loan to value ratio of 60% from 3.20% to 3.10%.

The bank has also cut its three-year and five-year fixed rates for borrowers with this loan to value ratio to 2.80%, which will make it the market-leader in these product categories.

As with first-time buyers, the best of the bank’s new rates are only available to current account holders.

Is there a mortgage rate war on the horizon?

The mortgage rate cuts being introduced by Ulster Bank and KBC are indicators that there is a mortgage rate war on the way.

In 2017, rate cuts across multiple banks occurred within weeks of eachother and it will be interesting to see how the likes of AIB, Bank of Ireland and Permanent TSB react.

Further cuts to fixed rates would certainly be good news for Irish customers who are still paying much more than their European counterparts

To find the best mortgage rates, prospective borrowers should approach cashback offers with caution and shop around before making a decision.

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