Recently, Ulster Bank, a major mortgage lending bank, announced a drastic interest rate cut down to a 2.3% fixed rate for two years. Essentially blowing their competitors out of the water.
Against all other players in the market, the Ulster Bank is offering the lowest rate of all.
Ulster’s closest competitors, being the center at Haven Mortgages with a fixed rate set at 2.8%. All other banks showing rates setting at 3% – 3.2%.
The lingering question after this announcement by Ulster is, will we be seeing a shift in other banks to lower their rates as well?
This is an important question for the borrowers as well as the lenders for it impacts the business trend between banks.
If the competing banks believe they need to to stay competitive then it is likely that we will, however, if they have the advantage to keep them ahead of their competitors then they will have no need.
It is hard to say for sure if the other banks will follow in suit and lower their interest rates but that is genuinely what we see take place when such events happen in any market, let alone, the housing market.
If a trend among consumers is seen that they are shopping around to find the best deal, other banks will essentially have no choice but to lower their rates or face an increased loss in business.
It is common with things like this, however, that consumers do not put the research in and therefore do not notice or do not care when they are paying more than necessary and not getting the best deal possible.
The new decreased rate being offered by Ulster Bank is being offered immediately and across all loan to value bands. Existing and new.
Some borrowers may be intimidated by agreeing to a fixed-rate for two years, however, with a contract so short, there is nearly no downside at all. If the borrower was to find themselves wishing to break a contract, the fees would remain relatively small and it should be an overall easy process to do so.
Well, Ulster Bank is beginning to offer this extremely appealing low-interest rate, it may take some time for borrowers to make the switch. With that being said, it is important for consumers to debate all the opportunities across banks as there are often times other offerings to take into consideration when making a decision.
Additional offerings from Ulster Bank include a €1,500 contribution to legal fees; €25,000 life insurance cover for first time buyers in the first year of the mortgage; half off home insurance for first time buyers in the first year of the mortgage; and a 10 percent annual overpayment allowance on fixed-rate products.
Ulster Bank is causing a drastic change in the mortgage market as other competitors will have to choose how to stay competitive and maintain their current consumer base.
Over time a shift will be seen in which Ulster will either dominate the housing market, or the market will seek a new equilibrium.
