The mortgage market has gotten another shake-up after Ulster Bank announces they would pay €500 to homeowners who switch both their mortgage and current account to Ulster Bank. This move came as a result of Bankinter stating that they would enter the Irish mortgage market starting in the fall. This major mortgage market announcement from Bankinter is what caused Permanent TSB to announce cuts to all their mortgage rates for all new and existing customers.
Ulster Bank has also stated that the €500 cash bonus was on top of the €1,500 cash towards legal fees that it offers to mortgage switchers. The €500 cash bonus offer is available until September 21 2020, and customers have to use their current account at Ulster Bank for their main everyday transactions.
Experts in the Irish mortgage industry say that this move by Ulster Bank was part of a bigger competitive struggle in the home-loan market that has been brutally scarred by the pandemic. Now more then ever, it is crucial for lenders to get more mortgage customers.
Mortgage switchers are good prospects for lenders as they typically have a good track record of payments and usually have steady employment.
Ulster Bank commissioned research on mortgage holders to determine their switching habits. 53pc of mortgage owners never thought about switching their mortgage, while only 32pc said they thought about switching their mortgage but never went through with it.
The intention behind offering a cash bonus for a set time period to switchers is to entice these mortgage switchers to join Ulster Bank. This way, they can grow their user base and market their finance products to a potential bigger user base.
Ireland mortgage rates are twice as high as their cousins across the Eurozone, and these rates only rose in the month of May. The mortgage rates in Ireland are significantly higher than their European cousins, and Avantcard with their parent company Bankinter saw an opportunity. The average mortgage rate in Ireland is currently 2.87pc, and Avantcard, operating under the brand Avant Money, will offer rates below 2pc. Currently, not a single lender offers mortgage rates below 2pc in this mortgage market according to mortgage broker Michael Dowling.
This article was written by Ian, an intern at Irish Mortgage Brokers and Yes.ie from the USA.