British banks ‘hamstrung’ in Ireland

A TWO-TIER pricing structure has emerged in the mortgage market in Ireland with Irish lenders offering more attractive rates to customers than British banks.

This is according to Davy Stockbrokers which said that because many of the British banks such as Halifax and Ulster Bank are outside the Irish government guarantee scheme they are under less political pressure to be seen looking keen when it comes to approving mortgages.

AIB confirmed yesterday that it had its best May for mortgage approvals for first-time buyers since 2005.

Davy analyst Scott Rankin said capital and funding pressures at home inevitably mean that the British banks are probably “hamstrung” in Ireland.

Mr Rankin said a big gap has opened up between the domestic players and the British players for new business, with the latter “effectively telling their customers ... to go elsewhere”.

He said the best variable rate for a first-time buyer at the moment is around 2.65%-2.7% from Bank of Ireland, AIB and EBS.

“Compare that with 3.75%-3.95% at Ulster Bank and 4.45% at Halifax. PTSB is just off the pace from the other domestics at about 3%-3.15%, which no doubt reflects its desire to shrink its loan book slightly (but not too much) given funding constraints,” he said.

According to Davy mortgage, approvals at AIB and Bank of Ireland have picked up recently, with AIB in particular “hoovering up a lot of business”.

Meanwhile figures released by the Bank of England showed mortgages rose last month.

The number of mortgages approved for house buying rose to 43,414, up from the figure of 43,191 the month before.

It was the fourth month in a row that approvals have risen.

Recent evidence from lenders has also suggested that the slump in house prices is slowing down.

While the mortgage market appears to have recovered slightly from the start of the year, levels of activity remain depressed, saidBSA director general Adrian Coles.

The Bank of England’s figures show that net lending for house buying in May, by all lenders, grew by just £324m – the smallest monthly increase on record.

“Bank of England data suggests that mortgage approvals for house purchases only rose modestly in May,” said Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors.