BELGIAN LENDER KBC confirmed yesterday it was increasing interest rates on some of its variable rate mortgage products and also withdrawing some fixed interest products.
A spokeswoman for the bank said the move was due to the high cost of financing these products on the money markets but also reflected a lack of demand from customers for them.
KBC, formerly IIB Bank, has withdrawn its five-year fixed rate mortgages but will continue to offer two- and three-year fixed rates.
From Monday next it will also increase its variable rate for new customers by 0.25 per cent to 3.55 per cent. This will increase monthly payments by €13 per month on every €100,000 borrowed over 25 years. The spokeswoman pointed out that the rate will not change for existing customers and any customers that have received offer letters will have them honoured.
The lender is also withdrawing its current offer of providing €1,000 in legal fees for mortgage customers who switch their loan from another institution. This will come into effect next month.
The spokeswoman said KBC was seeing relatively few switchers and it was now “putting its efforts into supporting buyers of new homes and first-time buyers”.
Mortgage lenders have been moving to increase variable and fixed rates to offset losses on tracker mortgages pegged to the European Central Bank’s historically low interest rates.
