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Permanent TSB is set to announce a 0.5pc reduction in its two, three and four-year fixed rates for existing customers. Photo: Collins

Mortgage price war hots up as Permanent TSB is latest to cut fixed rates

Permanent TSB is set to announce a 0.5pc reduction in its two, three and four-year fixed rates for existing customers. Photo: Collins

Permanent TSB is set to announce in the coming days deep cuts in its fixed mortgage rates for its existing customers.

It comes after dramatic reductions in Ulster Bank lending rates, a move that is set to put AIB under huge pressure to cut its lending rates.

Permanent TSB is set to announce a 0.5pc reduction in its two, three and four-year fixed rates for existing customers.

This will see its two-year rate go from 4.20pc to 3.7pc for existing customers who lock into it.

On a €300,000 mortgage, the new rate will be €90 month cheaper.

Permanent TSB was heavily criticised at an Oireachtas committee last week for having some of the highest fixed rates in the market.

There were calls for other lenders to follow with rate reductions.

The Ulster Bank cuts are likely to spark a reaction from AIB, which has been competing by offering good value on variable rates only.

But most new and existing customers, who are not on trackers, are choosing to fix as wholesale rates are due to rise.

Ulster Bank has challenged its rivals with a new 2.3pc two-year fixed rate, that is available to borrowers irrespective of their loan to value. It has also reduced its seven-year rate by 0.3pc, and has opened up its competitive four-year rate of 2.6pc to all borrowers, instead of restricting it to those with large deposits or a lot of equity in their homes.

The Ulster Bank cuts are likely to spark a reaction from AIB, which has been competing by offering good value on variable rates only.

Bank of Ireland has cut its fixed rates, but has concentrated on building up its market share by offering new customers and switchers cash back when they sign up for their mortgage.

Owen Callan, banking analyst at specialist bank Investec, said rates had already fallen at the main lenders.

But he added: “The Ulster Bank move will probably put the most pressure on AIB to act given its less competitive fixed-rate product suite and erosion of market share seen in the second half of last year.”

Brendan Burgess, of the Fair Mortgage Rates Campaign, said Ulster Bank had introduced “significant cuts” which may be sufficient to motivate people to switch lenders.

“Any customer of Bank of Ireland or Permanent TSB who is paying the 4.5pc standard variable rate has only themselves to blame if they can switch but can’t be bothered to do so.”

He said Ulster Bank customers on its variable rate should fix immediately.

He accused Bank of Ireland, Permanent TSB and EBS, which is part of AIB, of maintaining what he called artificially high mortgage rates for existing customers by offering them cash-back deals.

Fianna Fáil finance spokesperson Michael McGrath described Ulster Bank’s decision to slash its two-year fixed rate to a market best of 2.3pc as “a major breakthrough for consumers”.

He said it was hard to see how other banks in the market cannot afford to respond.

“It proves the point that Fianna Fáil has been consistently making – banks in Ireland have been ripping off mortgage holders and can afford to cut rates closer to European norms and still make healthy profits.”

 

 

independent.ie

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