10,000 Ulster customers could cut mortgage rate

Around 10,000 Ulster Bank customers are paying one of the highest mortgage rates in the eurozone, at 4.3%, despite opportunities to move to a lower band, the lender has said.

10,000 Ulster customers could cut mortgage rate

Around 10,000 Ulster Bank customers are paying one of the highest mortgage rates in the eurozone, at 4.3%, despite opportunities to move to a lower band, the lender has said.

Ulster Bank management, including chief executive Jane Howard, told the Oireachtas finance committee that of its €16.1bn mortgage loans book, trackers account for 59%, or €9.4bn, total variable rate products total 17%, or €2.8bn, and fixed rate products account for 24%, or €3.9bn.

Asked by Fianna Fáil finance spokesman Michael McGrath how many customers of the 17% variable band are still paying 4.3%, Ms Howard said it is around 10%.

“Some people choose a variable rate for a very good reason. We make sure we write to those customers on an annual basis and bring to their attention that we do have other rates on offer,” she said.

Chief financial officer Paul Stanley said the number is around 10,000, and that despite writing to tell them of better options, many customers have not responded “for one reason or another”.

Irish mortgage rates are much higher than eurozone counterparts, according to Central Bank figures.

It said last month that average rates in the Republic are 3.02%, compared to an average of 1.76% in the eurozone.

Ms Howard also confirmed a further sale of soured loans is being planned by Ulster Bank.

The rate of non-performing loans is now 10.3% compared to 17% in late 2018, she said.

There was not a specific target ordered by the ECB when it came to reducing non-performing loans but it considers in excess of 5% high, said Ms Howard.

Getting down to the eurozone average of 3% to 3.4% is likely next year rather than this year, she said.

Ulster Bank was blasted by Sinn Féin finance spokesman Pearse Doherty for its loan sales.

He accused the lender of “outsourcing dirty work to vulture funds” rather than dealing with customers in difficulties.

Mr Doherty said Ulster Bank was giving the impression that “some customers are scammers” because they couldn’t pay what the lender wanted, rather than coming to a resolution.

Ms Howard refuted the charge and said the bank “didn’t judge anyone”, but that while it did not want to sell any loans, it was compelled to where customers did not engage.

Four out of five customers had come to an agreement to keep them in their home when they engaged, said Ms Howard, adding that Ulster Bank is in “an almost impossible situation” and does “exhaust all options”.

Separately, Permanent TSB said it has had a good start to the year.

In a trading update, the mortgage lender said it had €300m in new lending in the first three months, up 25% from a year earlier, and had boosted its shares of the new mortgage lending to over 15%.

However, its net interest margin — an important measure of profitability for banks — rose only slightly, to 1.79%.

Owen Callan, a senior analyst at Investec Ireland, said the bank would likely sell more loans or securitise more loans in the market to reduce its high level of non-performing loans.

About 10% of its gross loanbook were deemed as non-performing at the end of last year.

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