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Mortgage market heats up again as KBC slashes its fixed rates by up to 0.55%

The recent mortgage war shows no signs of abating with news that KBC is reducing its mortgage rates.

KBC has reduced a number of its fixed rates across one, two, three, and five years. The move comes in response to a recent reduction in rates by arch rival Ulster Bank.  

Among the reductions, KBC has reduced its one-year fixed rate for first-time buyers from 2.90% to 2.50%. Its three-year fixed rate has been reduced from 3.00% to 2.65%, while its five-year fixed rate has been slashed from 3.35% to 2.80%.

The bank is now the market leader across all these time periods although Ulster Bank still has the lowest rate overall with a 2.30% fixed rate over two years.

The changes mean that a first-time buyer borrowing €250,000 over 30 years would save almost €75 a month by availing of KBC’s new five-year rate.  

Meanwhile KBC’s three-year fixed rate for movers and switchers, or first-time buyers with over 20% deposit, has been reduced from 2.90% to 2.60% while its five-year rate has been reduced from 3.05% to 2.65%.   

When do the new rates come into effect?

The new rates will be available to both new and existing KBC mortgage customers and come into effect from 3rd September 2018. All rates incorporate the 0.20% discount available to KBC current account customers. 

The trend of banks reserving their best mortgage rates for their current account customers is nothing new so it could be wise for customers to switch current accounts in order to avail of the best mortgage rates being offered by their lender of choice.

Announcing the new rates, KBC Bank’s Director of Products, Fergal O’Riagain said:

“This reduction is part of our ongoing commitment to provide customers with better long-term value and lower mortgage repayments. Customers are looking for greater value and certainty in their repayments over longer periods and our new pricing reflects these needs. Our new rates mean greater choice for first-time buyers and greater value for movers and switchers."

Fixed rate

(based on loan-to-value ratio)

New rate

Current rate

Reduction

1 year ≤90%

2.50%

2.90%

-0.40%

2 year ≤60%

2.50%

2.80%

-0.30%

2 year >60-80%

2.55%

2.90%

-0.35%

2 year >80-90%

2.60%

3.00%

-0.40%

3 year ≤60%

2.55%

2.80%

-0.25%

3 year >60%-80%

2.60%

2.90%

-0.30%

3 year >80-90%

2.65%

3.00%

-0.35%

5 year ≤60%

2.60%

2.90%

-0.30%

5 year >60%-80%

2.65%

3.05%

-0.40%

5 year >80-90%

2.80%

3.35%

-0.55%

Will other banks reduce their mortgage rates?

KBC’s reduction in rates is unsurprising given the recent reductions by Ulster Bank and is great news for mortgage customers in Ireland, particularly as recent figures from the Central Bank show that mortgage rates here are still well above the European average.

The question now seems to be when, not if, AIB and the rest of the banks will follow suit.

Should I switch mortgage provider?

Many people are under the false assumption that you have to stick with the same mortgage provider throughout the entire term of your loan. However, like any household bill, you should review your repayments regularly.

With competition in the mortgage market contining to heat up, now is an excellent time to review your monthly repayments to see what you could save by switching to a better rate as the savings over the liftime of the loan can be huge.

And let's face it, who doesn't want a few extra hundred euros in their pocket each month!?  


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