The Government had increased the relief for those who bought houses during the boom in Budget 2012.
Due to technical issues the bank has been paying mortgage interest relief of 25%, not 30% as it should have been.
For an individual with a mortgage of €250,000, on an interest rate of 4.5%, the incorrect rate means they would have been left short by €564 in a full year.
The bank said the issue will be fully resolved by March of next year.
Yesterday the Dáil heard that Ulster Bank was the only one of 132 mortgage lenders in the country that has still not facilitated increased mortgage increase relief.
Minister for State at the Department of Finance Brian Hayes has described as “very disappointing” the bank’s delay.
Mortgage lenders provide the relief at source, facilitated by ongoing data file transfers with Revenue.
To apply the new 30% rate technology developments were required within Revenue and the lenders.
Revenue upgraded last December and has been engaged with lenders since then.
As an interim measure, all of the 189,000 mortgage holders targeted for the extra relief were moved on to a 25% rate as this was in the capabilities of the IT systems of all parties.
The speed of updating the IT system to the 30% has not been uniform across the lenders, however by May 2012 109 lenders, covering 107,000 cases or 57% of beneficiaries, were receiving the full benefit.
To date the IT upgrades in 131 of the 132 lenders have successfully upgraded, covering 151,000 cases or just over 80% of beneficiaries.
In a statement, Ulster Bank said that eligible customers would be paid the additional 5% difference direct to the mortgage account in the first half of December.
“All customers will shortly receive written confirmation and details of their specific transaction,” the bank said.