What will KBC's 10-year fixed rate mortgage mean for first-time buyers?
Robyn Hamilton
Staff Writer

KBC will introduce a new market-leading 10-year fixed mortgage rate on October 2nd, but what will this mean for first-time buyers?

Seemingly countless factors - rising prices, housing shortages, astronomical rent prices (to name but a few) - in recent years have made the prospect of gaining a foothold on the property ladder feel like an impossibility for many.

It’s not all doom and gloom however, as there is some light on the horizon for those hoping to make a move in this property market this year.

The number of first-time buyer mortgage approvals rose by 43% in the first seven months of the year, AIB recently announced that it will cut a number of its mortgage rates on November 1st and KBC came in hot on its heels announcing a new range of 10-year fixed mortgage rates of its own.  

So, how will these cuts affect you?

KBC’s new 10-year fixed rate mortgages:

On October 2nd, KBC will introduce a new market-leading 10-year fixed rate mortgage. New and existing KBC customers looking for a mortgage with a loan-to-value ratio of 80-90% (i.e. the majority of first-time buyers) will be eligible at a rate of 3.5%.

Loan-to-value ratio refers to the proportion of a property’s value that must be borrowed. So, an LTV of over 90% means that the buyer has had to borrow over 90% of the overall price of the house or apartment in order to afford it.

Stability and peace of mind:

Considering that 3.5% was one of the best variable rates available on the market until just a few months ago, the guarantee of knowing exactly what your mortgage repayments will be every month for such a long time period should certainly appeal to first-time buyers. It's also worth noting that the European Central Bank's rate (which affects banking rates in Ireland) is currently at an historic low of 0.00%. If and when it rises, variable rates in Ireland are likely to be affected and rise accordingly. If, however, you decide to opt for KBC's 10-year fixed rate you can rest easy as your rate will remain fixed for the duration of that 10-year period.  

Let’s found out how with an example.   

Let’s say you’re a first-time buyer looking to buy a €300,000 home (the average value of a first-time buyer property in 2016 was €250,361). You’ve carefully managed to save and have your Central Bank-required 10% deposit (€30,000) and therefore need to borrow €270,000. Let’s also say that you plan on repaying the loan over 30 years. At KBC’s new 10-year fixed rate of 3.50%, your monthly repayments would come to around €1,212.

For context’s sake, that monthly repayment amount of €1,212 is guaranteed for a third of the lifetime of your loan! For 10 whole years, you’ll be worry-free when it comes to the likes of fluctuating rental prices and considering that renters in some parts of Ireland are currently paying twice as much as mortgage holders per month, that knowledge lends considerable peace of mind to the prospective first-time buyer that shouldn’t be taken lightly.  

Competition is always good news for the customer

KBC’s market-leading 10-year fixed rate came about in reaction AIB’s recent range of mortgage cuts and demonstrates that there is growing competition in the market and this can only be good news for customers looking for a better deal on their mortgage. Currently, there is only one other bank offering 10-year fixed rates to first-time buyers; Bank of Ireland but its rate is quite a bit higher than KBC’s at 4.2% (keep in mind however, that it is also offering 3% cashback). We can only hope that the other major banks follow suit and cut their rates.

In the meantime, it has never been a better time to shop around for deals if you’re in the market for a mortgage. You can compare mortgages across all financial institutions now using our mortgage calculator.