KBC cuts mortgage interest rates for new and existing customers

KBC Bank Ireland is to cut fixed and variable mortgage interest rates by between 0.1 per cent and 0.6 per cent for both new and existing customers.

The bank, which has previously been criticised for only passing on rate cuts to new customers, said the revised rates varied depending on the mortgage amount relative to the value of the home.

While the bank has reduced some of its rates, it is not cutting back its standard variable rate, which remains high at 4.25 per cent.

KBC said that along with the new rate cuts it is also offering €2,000 towards professional fees for switchers, movers, first-time buyers and buy-to-let investors. In addition, it has extended its 50 per cent offer of home insurance for new mortgage customers until the end of the year.

The bank said under the new rates, an existing customer with a €250,000 mortgage balance on a standard variable rate at 4.25 per cent and 20 years remaining and a loan-to-value (LTV) of between 80 per cent and 90 per cent could save €98.19 per month and €23,565 over the term of the mortgage by availing of the reduced LTV variable rate of 3.50 per cent.

A similar customer could also increase their savings in year 1 to €174.01 per month and €25,261 over the term by availing of the one-year fixed rate of 2.90 per cent, the bank said.

Valuation

New mortgage customers will be able to avail of the new rates from the start of November. Existing customers will able to apply for the revised rate from early December but only after submitting an up-to-date valuation of their property by an approved valuer.

KBC has also announced a new limited offer promising what it said was the lowest personal loan rate currently available of over €10,000 at 6.3 per cent annual percentage rate (APR).

Investec chief economist Phlip O’Sullivan said he expected the impact of both political pressure and rate cuts by the likes of KBC to feed through to similar 25 basic point cuts in lending rates by the rest of the major Irish mortgage providers during the fourth quarter.

He said downward pressure would likely remain on mortgage pricing next year, particularly with niche new entrants to the Irish market such as Frank Money expected to offer rates below 3 per cent.

Mr O’Sullivan said he expects Permanent TSB and Bank of Ireland will continue to only focus on cutting rates for new customers to protect income from existing loans.