KBC mortgage holders could face higher repayments from BoI deal

KBC Bank mortgage holders have been warned they could face higher interest rates and repayments when their loans transfer to Bank of Ireland.

The Belgian lender is exiting the Irish market and selling its loan assets and deposits to Bank of Ireland for €5 billion.

Last month the two banks announced they had entered into a binding agreement for KBC’s portfolio of performing mortgages worth €8.8 billion as well as €4.4 billion of deposits.

Some 40,000 KBC mortgage holders will see their loans transfer to Bank of Ireland if the deal is sanctioned by the competition authority.

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Financial broker MyMortgages.ie is warning those on KBC fixed-rate contracts that they could see their repayments increase by thousands of euro, if they move to Bank of Ireland rates once their current fixed rate term is up.

They are also advising KBC’s variable rate mortgage holders that their new lender will be free to increase their variable rate at any time.

It advised mortgage holders that they could avoid these increases by shopping the market and possibly switching lender, making average savings of €2,000 or more, over a three-year term.

"When KBC first announced their intention to leave the market, we received a raft of calls from affected fixed rate mortgage holders, concerned as to what the sale would mean for them," Joey Sheahan, head of credit with MyMortgages.ie, said.

“We have assured them that consumer protection laws mean that their current agreement will have to be honoured by Bank of Ireland, but that once their fixed rate term ends, they could face much higher interest rates and repayments if they remain with Bank of Ireland – who are currently not the most competitive lender in the market,” he said.

“Those on variable rates are in a more precarious position as Bank of Ireland are free to increase their rate as soon as they move across and, while this may change, BoI are currently offering some of the highest SVRs on the market,” he said.

“What we are telling people is that they should really use this as an opportunity to conduct a full mortgage review with a view to switching to the best value provider,” Mr Sheahan said.