BoI extends 2% cash back on new mortgages by three months

Bank of Ireland has decided to extend its 2 per cent cashback offer on residential mortgages by three months until the end of June as the competition for new business in home loans heats up.

The cashback offer was launched by Bank of Ireland in June 2015 and was due to end in March. However, the Richie Boucher-led bank has now decided to extend it by three months in what is being considered as a response to Permanent TSB’s plan to launch a similar product on Monday.

Commenting on the decision to The Irish Times, John O'Beirne, head of mortgages at Bank of Ireland said: "We've seen strong demand for our 2 per cent cashback initiative, so we're extending it until the end of June, when we will review it again.

“We’re very conscious of the challenges facing customers in seeking to purchase a property and, apart from helping them through the mortgage process, we want to help cover additional expenses associated with moving into a new home. The feedback from customers is that this 2 per cent offer makes a substantial impact.”

It is not clear how many of these mortgages Bank of Ireland has issued since last June but it is understood that the average payout to customers has been €3,700. Bank of Ireland is believed to be writing one in three new home loans in the Irish market at present.

Competition for new mortgage customers has intensified in the past year or so as banks seek to write new business and win market share.

PTSB, which is 75 per cent controlled by the State, will announce details on Monday of a new initiative that will also give 2 per cent cash back on home loans.

On a mortgage of €300,000 this would mean the customer receiving €6,000 to use as they wish.

Called the 3-in-1 Mortgage, it will have three main features. The cash back offer will be available on variable and fixed rates. There is also a one-year 0.5 per cent discount on the bank’s normal variable rates for amounts up to 80 per cent loan-to-value, and it will offer flexible payment options.

It will apply to all new business - first-time buyers, movers (excluding negative equity/tracker portability customers), self-build customers and switchers. Customers will get the cash back within 10 days of drawdown.

It will be available for mortgages approved before June 30th including those who had received a full letter of approval before January 11th.

PTSB had previously offered new mortgage customers €1,000 towards their legal costs. It is thought to have a 10 per cent share of the mortgage market.