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Mortgages

Mortgage rate war looms as KBC slashes its fixed rates again

Mortgage rate war looms as KBC slashes its fixed rates again
Daragh Cassidy

Daragh Cassidy

Head Writer

Competition in the mortgage market heats up as an all out mortgage rate war looms.  

KBC has announced that it's reducing some of its fixed rates. The move comes hot on the heels of a rate reduction by arch rival Ulster Bank last month when it introduced Ireland’s lowest rate of 2.20%. 

What are the new rates?

Among the reductions, KBC has reduced its three-year fixed rate for first-time buyers with a 10% deposit from 2.65% to 2.35%. Its five-year fixed rate for first-time buyers has also been reduced by 0.30% to 2.50%. 

Those lucky enough to have a 40% deposit or more will get a fixed rate of 2.25% over three years, a reduction of 0.30%, and 2.40% over five years, a reduction of 0.20%.

Only a few months ago KBC also slashed its 10-year fixed from 3.75% to 3.20% for those with a 10% deposit, while those with a 40% deposit or more now get a rate of just 2.85%. 

The changes mean that an average first-time buyer borrowing €225,000 over 30 years would save almost €426 a year by availing of KBC’s new five-year rate or almost €2,130 over the course of the five-year term.   

Rate* LTV Existing rate Reduction New rate
3-year fixed ≤60% 2.55% -0.30% 2.25%
3-year fixed 60-80% 2.60% -0.30% 2.30%
3-year fixed 80 - 90% 2.65% -0.30% 2.35%
5-year fixed ≤60% 2.60% -0.20% 2.40%
5-year fixed 60 - 80% 2.65% -0.20% 2.45%
5-year fixed 80 - 90% 2.80% -0.30% 2.50%

*All rates incorporate the 0.20% discount available to KBC current account customers. 

Who are the new rates available to?

The new rates will be available to first-time buyers, movers and switchers and come into effect from 1st March 2020. 

KBC's new rates are also available to both new and existing customers. So if you're an existing customer of KBC then get in touch and see what options are available to you.    

Looming rate war?

In the space of just a few weeks we’ve seen mortgage rate reductions from both Ulster Bank and KBC. This follows a pattern we saw last year by both banks and it really is the smaller banks that are driving most of the downward pressure on rates in Ireland right now. 

This development is undoubtedly good news for mortgage holders who for too long have suffered with some of the highest rates in the Eurozone. The question now is whether the bigger banks like AIB and BOI will follow suit and launch an all out rate war.  

Consider your options

If you’re a first-time buyer then shop around and do your research a good few weeks before you apply for your mortgage. The market is more competitive than ever and there are some newer non-bank lenders like Finance Ireland and ICS mortgages who are also offering very competitive rates right now so don’t be afraid to check them out!

And if you already have a mortgage, then look into switching. Someone who switches a €250,000 mortgage, and is currently paying a 4.30% rate, will save over €250 a month by switching to the cheapest deal on the market. What’s more, at the start of last year the Central Bank introduced new rules to make the mortgage switching process easier so this, coupled with the trend of falling rates, means there’s never been a better time to switch. If that's not enough, most of the lenders in Ireland, including KBC, will give you cashback if you switch, meaning you can save even more! 

Before you decide, always compare

Although the new rates from Ulster Bank might seem competitive, make sure you compare all rates across all lenders on bonkers.ie before you commit with our free, easy-to-use mortgage calculator.

  

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