Ulster Bank reports increased share of new mortgage market

Ulster Bank's share of new mortgage lending has increased by four points to 19 per cent in spite of the negative impact of the Central Bank's macroprudential rules, according to a document submitted to the Oireachtas finance committee in advance of its appearance on Thursday.

The bank in the Republic, led by chief executive Gerry Mallon, told the committee that its new mortgage lending had increased by 49 per cent compared to the third quarter of 2015.

It said the Central Bank’s rules on mortgage lending, which were loosened slightly last week, have had an “impact on our business” although it was difficult to ascertain whether these “helped or hindered us”.

Ulster Bank told the committee that its standard variable rate (SVR) was 4.3 per cent, making it the most expensive mortgage loan on its books.

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The bank said its SVR customers could move to a lower interest rate in its suite of products, without penalty.

It wrote to these customers in April 2015 to make them aware of the different options that were available to them but the uptake was “relatively low”.

Cost of funding

Ulster Bank also told the committee that its cost of funding at November 24th, 2016, was 0.7 per cent, well below the rate it is charging customers.

The bank said it was “satisfied” that the fundamentals of the commercial property market in Ireland “remain sound” , particularly in urban locations.

However, because of the significant supply of new offices over the next two to three years, uncertainty around the impact of Brexit on the Irish economy, and changes in tax legislation for property investment vehicles, it is “cognisant of potential downside risk”.

Ulster Bank also told the committee that its new lending to SMEs had increased by more than 40 per cent on 2015, reflecting an increased focus to “work with and support” the sector.

It said this included funding for acquisitions and business expansions; capital expenditure on premises, plant and machinery; and working capital.