Mortgage with AIB or Ulster Bank

Hi,

Long time viewer of this website but first time poster. I am a FTB with mortgage approval from both Ulster Bank and AIB. SVR with AIB is going to be 4% and Ulster Bank are offering 4.1% based (with a lifetime guarantee of -0.4% below their standard variable rate).

I know it's impossible to predict but does anyone have any opinions on which bank is more likely to keep their rates lower in the future?

My own thoughts are that because AIB are now state owned, they will not want to lead the market in terms of having a high interest rate. They are more likely to follow others after they increase rates so I think AIB will generally end up with the same rate as the rest of the market.

Ulster Bank is harder to predict - they are not accountable to the Irish government so could increase/decrease as they wish. However, the mortgage lifetime guarantee of -0.4% on their SVR could be good to have in the future.

Any thoughts on which provider would be best to go with would be appreciated.

It's very hard to say, as you know. With AIB you would be putting your lot in with a larger group of mortgage holders with arguably more "influence" (though I use the word lightly) given its state-owned nature. I suspect there won't be much difference in mortgage rates between the institutions in the long run. AIB/BoI have started hiking rates. On that note, have you verified the AIB rate is in fact 4%? They have announced two recent hikes.

I agree - it's very difficult to predict and possibly will not make any great deal of difference in the long run. However, as you say, AIB have a larger pool of mortgage owners and the government will surely not allow them to increase rates ahead of the rest.

I just wonder if at some stage Ulster Bank will try to build up a bigger mortgage business in Ireland again (based on more sensible lending of course!!). If they do, the quickest way of building a loan book would be to offer lower SVR mortgages.

Yes, AIB confirmed the rate would be 4% (or 4.04% - not sure which one they said) from 13th November. The rate at the moment based on my LTV is 3.54% but that is being increased in November.

If you are planning on borrowing from AIB to purchase a house with LTV>80%, then the interest rate will be 4.24%, not 4%

However, the mortgage lifetime guarantee of -0.4% on their SVR could be good to have in the future.

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Not really. UB have the highest Standard Variable Rate. So the rate after the discount is still 4.1%. If you fix your rate at any stage, you will lose the discount and end up paying the very high SVR.

UB has ground to make up because of the IT problems,so I doubt if they will be pushing up rates out of line with the ECB and market.

But it's impossible to tell.