Monday 5 December 2016

KBC Bank fails to cut variable interest rates, reduces fixed instead

Published 29/06/2015 | 14:11

Michael Noonan: pressure to extend scope of IBRC inquiry
Michael Noonan: pressure to extend scope of IBRC inquiry

ANOTHER bank has reduced its fixed rates for new and existing customers, instead of cutting variable rate for established mortgage holders.

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KBC Bank has one of the highest variable rates in the market at 4.5pc.

It is now offering existing customers the option of fixed for between two and five years at rates as low as 3.90pc.

The 3.90pc two-year fixed rate only applies to those who take out a current account with the bank and have their mortgage payments made through this account. Otherwise, two-year fixed rate is 4.10pc.

Director of products at the bank Eddie Dillon defended the bank’s failure to cut its variable rate, arguing that the move in February to allow existing customers get 0.2pc off their mortgage rate for opening a current account was an effective reduction in the rate.

The bank argued that an existing mortgage customer on a variable rate of 4.5pc can save €1,736 in a year, on a €300,000 mortgage by availing of KBC’s new two-year fixed rate of 3.90pc, with a KBC current account.

Finance Minister Michael Noonan has set a deadline of next Wednesday for banks to respond to his demands for cuts to rates.

State-owned Permanent TSB is set to announce it will allow its existing customers to avail of cut-price rates that are only given to new customers at the moment.

This could see some existing customers making big savings.

And Ulster Bank is set to announce lower rates for its existing customers, the Irish Independent has learned.

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