The mortgage market in the UK has long been one of the most competitive in the world. Cheap deals, great introductory offers and all sorts options such as capped and collared rates have long been available. In many ways the Irish market has followed behind. Over recent years the product offering from many lenders here has become far more flexible and new borrowers can expect a substantially cheaper mortgage in their first year than at any other time.

This is the route chosen by almost all lenders. Indeed if you look at the table to the left the differences are obvious. Banks of Ireland's new business variable rate is 4.74 per cent but the variable rate for new business is 5.85 per cent - a substantial difference. Irish Permanent has a discount for new customers who pay 4.89 per cent while existing customers pay 5.89 per cent.

Lenders say the differences make sound business sense. New borrowers need to be attracted to a particular institution whereas existing ones are unlikely to move. In addition, nearly all existing borrowers would have had their own introductory offer and it is only equitable that those coming later could avail of a similar deal.

With AIB, the standard variable rate is 5.425 per cent for both new and existing customers while the one-year fixed rate for new business is 4.99 per cent.

In the past many lenders also offered three and even five-year fixed rate at discounted levels to attract new business. Most have now stopped this following complaints from existing customers who did not want to feel they were subsidising the lenders new business to that extent. However, some lenders such as First Active still penalise their existing customers in this way, although by smaller margins than in the past. For example existing customers would pay 5.69 per cent for a two-year fix which new customers could get at 5.59 per cent. Others such as IIB have even wider margins. Their existing customers must pay 5.94 per cent for a two year fix while new customers will pay 5.69 per cent.

This sort of subsidy from existing to new customers also used to be commonplace in the UK and indeed was taken to a new level where lenders even made losses over the first few years of a loan. However, in recent times several lenders have begun to experiment to reward existing customers. Many of the lenders found that customers were becoming conscious of the better deals they could get elsewhere and remortgaging became relatively common. They could no longer rely on customer inertia.

Last February Halifax slashed its basic mortgage rate. Other lenders such as Nationwide and HSBC made similar moves. All three argued that offering big discounts to new borrowers and charging higher interest rates once special introductory rates ended had created a perverse market. The new approach was to cut rates for loyal customers and scale back the cheap deals for new borrowers. And it produced results. Halifax and HSBC both increased market share dramatically. The exception was Nationwide which saw its share of the market fall.

However, analysts say the reason is that it ended all cut price introductory offers which made mortgage brokers extremely reluctant to recommend it. Irish lenders may never have gone as far as their UK counterparts in offering cheap deals to new customers but many still believe that refinancing is likely to be a growing part of the scene here over future years. So far AIB is one of the few lenders which broadly treats all customers the same while also having rates in the bottom quartile in the market. Only time will tell if the others will follow.

So far, lenders such as Irish Permanent and First Active have launched equity release products and more sophistication can be expected over the coming months and years.