Ulster Bank rate reduction a ‘long-awaited shake-up’

Pádraig Hoare

Ulster Bank’s reduction in fixed rates is a sign of “a mortgage war that shows no sign of abating”, but Irish homeowners still face hefty payments in comparison to their European counterparts.

Michael McGrath: Ulster Bank’s reduction was a ‘long-awaited shake-up’ of the mortgage market. Picture: Denis Minihane

That is according to consumer website Bonkers.ie, which said the lender’s reducing of its seven-year fixed rates, as well as a new two-year fixed rate of 2.3%, meant it was now the market leader.

Ulster Bank also reduced the rate on its four-year fixed rate from 2.85% to 2.6% for first-time buyers.

It follows hot on the heels of recent rate reductions by EBS and KBC. The ongoing reduction in new mortgage rates is certainly good news for home buyers, but we need to remember that rates in Ireland still remain elevated compared to rates in most other eurozone countries, said Daragh Cassidy of Bonkers.ie.

He said many of the recent rate reductions by banks have been targeted at new customers, with existing customers seeing little in the form of price movement. He urged customers to “shop around” as “possible savings over the lifetime of a mortgage can be huge.”

Fianna Fáil finance spokesman Michael McGrath said Ulster Bank’s reduction was “a major breakthrough for customers” and a “long-awaited shake-up” of the mortgage market.

He said it proved Irish banks “have been ripping off mortgage holders and can afford to cut rates closer to European norms and still make healthy profits”.