Ulster Bank hikes interest level on fixed rate mortgages

Lender is in process of withdrawing from market in the Republic

Ulster Bank increased the interest level on its fixed-rate mortgages, the latest lender to hike the cost of home loans as central banks push up rates around the world.

The bank, which is winding down its operation in the Republic, increased rates by 0.4-0.9 per cent on fixed-rate products from today, it said in a statement. There is no change to variable rate mortgages, although the bank will remove its so-called loyalty variable rates from sale.

Ulster Bank stopped offering mortgages to customers last June, except for existing tracker and offset customers. It plans to close all its remaining branches in April as part of its plan to exit the Republic.

The rate increases impact “our two-, four- and seven-year fixed-rate mortgages,” Ulster Bank’s managing director designate of personal banking, Philip Duff, said. “If customers have any queries, our mortgage team are available for support and further information,” he added.


Under the new terms, interest on Ulster Bank’s two-year fixed-rate mortgage will go up 0.9 per cent, 0.6 per cent on four-year fixed and four-year fixed green mortgages, and 0.4 per cent on seven-year fixed home loans.

The bank will no longer offer what it calls loyalty variable rates to customers who had income mandated to an Ulster Bank current account. The firm will honour rates already offered to existing customers who have either applied for a fixed rate and are awaiting a loan offer or who have not yet completed their product switch, it said.

The NatWest-owned bank follows a line of lenders in recent months who have been increasing interest rates since the European Central Bank and other central banks began hiking borrowing costs from historic lows last year.

Pepper Finance said on Thursday it would pass on the full extent of recent ECB rate changes to its customers, with some borrowers now set to face an interest rate of as much as 8 per cent. AIB, Bank of Ireland and Permanent TSB have all pushed their mortgage pricing higher in recent months, while non-bank lender Finance Ireland has also moved its rates up

The European Central Bank’s main interest rate used for mortgages stands at 3 per cent, but is likely to increase by half a percentage point next month. ECB policymakers have made clear in recent days they are focused on taming inflation and indicated they would hike rates further to bring price growth under control. Importantly, they have also implied rates will stay elevated for longer. Last week François Villeroy de Galhou, who is also governor of the French central bank, effectively ruled out the prospect of a rate cut before 2024 at the earliest.

Peter Flanagan

Peter Flanagan

Peter Flanagan is an Assistant Business Editor at The Irish Times