IRELAND - Ulster Bank, in a phased withdrawal from the Irish market, has announced plans to end approximately 4,500 offset mortgages by mid-2024. These mortgages, originally acquired from First Active and unsold since 2008, will see customers receiving an average compensation of €12,650 in January to offset the loss of benefits associated with their mortgage.
The bank has assured customers that despite the removal of the offset feature, they will retain their tracker mortgage rates. Ulster Bank has previously sold tracker mortgages to AIB and fixed-rate portfolios to Permanent TSB while maintaining customer tracker rates and introducing a 'Pay and Redraw' function to mirror the benefits of offset mortgages.
Compensation for affected customers has been calculated to double the estimated value of future lost offset benefits, with a guaranteed minimum payment of €5,000 plus an additional €250 for financial advice. For those with arrears, the compensation will be applied to reduce their outstanding balance.
Jane Howard, Ulster Bank's Chief Executive, expressed gratitude to customers for their patience during this transition, emphasizing the bank's commitment to preserving the value of its products amidst market exit strategies.
By May 23, 2024, customers are required to close their accounts or have them settled by the bank, as the offset feature will be discontinued. The bank's compensation plan includes a detailed formula that takes into account historical usage, potential future savings without the offset facility, and an assessment of possible future balance increases due to life events.
The Central Bank of Ireland has been informed of Ulster Bank's ongoing plans, ensuring transparency and regulatory compliance during the bank's market exit.
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