KBC cuts rates on variable rate mortgages

Variable rate mortgages of Irish banks have come under increasing scrutiny recently

The variable rate cut takes the bank’s standard rate to 4.25 per cent

The variable rate cut takes the bank’s standard rate to 4.25 per cent

 

KBC Bank Ireland is to cut its standard variable rate mortgage for non buy-to-let customers by a quarter of one percentage point.

The cut takes the bank’s standard rate to 4.25 per cent although customers who also switch their current accounts to the bank will be able to see their rate fall a further 0.2 per cent.

The new rate will be applied to all existing customers, irrespective of loan-to-value ratio or repayment status and it will take effect from the beginning of December.

For every quarter of a point a rate falls, the monthly cost of servicing a €100,000 mortgage is reduced by about €15. This means the average KBC SVR mortgage holder with an outstanding loan of €300,000 could see their monthly repayments fall by €45, a saving of more than €500 a year.

While the cut is likely to be welcomed by the bank’s SVR customers it still leaves it a long way off some of the cheaper deals being offered by other banks.

AIB for example has an SVR of 3.65 per cent and 3.70 per cent for its subsidiary EBS.

The variable rate mortgages being imposed by Irish banks have come under increasing scrutiny in recent months and the Minister for Finance Michael Noonan has been in contact with all mortgage lenders and has repeatedly sought a reduction in SVRs to reflect the near zero interest rates being applied in the euro zone by the European Central Bank.

Meanwhile, KCB confirmed that problems with its systems led to some of its customers experiencing lodgement difficulties yesterday.

The bank did not go into details as to the extent of the problem other than to say that “a small number of customers may have experienced delays with payments”. A spokesman said that after delays of several hours “services have resumed as normal”.