Tuesday 27 September 2016

Mortgage war heats up with KBC's 0.3pc rate cut

Published 30/01/2016 | 02:30

KBC Bank is turning up the heat on its rivals with a cut of up to 0.3pc in its fixed rates for first-time buyers and switchers. Photo: AFP
KBC Bank is turning up the heat on its rivals with a cut of up to 0.3pc in its fixed rates for first-time buyers and switchers. Photo: AFP

The mortgage war has intensified with a leading lender cutting its interest rates for new buyers.

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KBC Bank is turning up the heat on its rivals with a cut of up to 0.3pc in its fixed rates for first-time buyers and switchers, the Irish Independent has learnt.

The move means an average-sized mortgage of €250,000 from the Belgium-owned bank will be up to €55 a month, or €660 a year, cheaper than rivals.

KBC cut variable rates for existing customers last month.

The latest move comes after Permanent TSB decided to match Bank of Ireland's cash-back offer to new buyers, new lender Pepper entered the market, and Bank of Ireland also offered to top-up savings for those trying to put a deposit together.

Now KBC's variable rates will also be reduced by 0.15pc for those borrowing between 50pc and 80pc of the value of the property, with effect from next Wednesday.

Fixed rates are coming down by between 0.25pc and 0.3pc for those fixing who have equity built up in the home.

KBC Bank is also committing to offer the best rate available to customers who fix when they come to the end of the fixed term.

The latest move marks a step up in the battle to sign up new mortgage borrowers, despite potential buyers being squeezed by Central Bank lending restrictions and a chronic shortage of properties for sale.

KBC said the changes would mean a couple borrowing €250,000 over 30 years, with a 20pc deposit, would end up on a rate of 3.65pc. This includes the 0.2pc discount for those who take out a current account.

It said this worked out cheaper than the average rate charged by rivals of 4.03pc, a saving of €55 a month.

The bank commissioned research from Ignite that showed almost half of first-time buyers who purchased in the last three years regard longer-term savings on the cost of the mortgage as the most important factor.

They are more attracted to monthly savings than the likes of cash-back offers. It shows 90pc of first-time buyers have been saving for a deposit for six years, with an average of €828 put aside a month.

Eddie Dillon, director of products in KBC Bank, said: "The feedback from customers shows that first-time buyers operate on a monthly basis, and are looking for lower monthly mortgage repayments to help them budget."

Irish Independent

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