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KBC to increase rates by 0.7pc

KBC BANK has become the third lender to hike mortgage interest rates, in a move that is set to be replicated by others in the coming weeks.

The Belgian-owned bank -- which issues around one in 10 home loans -- is increasing the interest on its fixed-rate mortgages by up to 0.7pc for new and existing customers.

Its five-year rate for new customers will now go up to 5.20pc -- one of the highest in the market.

The rise will mean it will now cost an additional €41 a month for every €100,000 borrowed. Existing customers who want to fix for five years will now be charged 5.50pc, up from 5.20pc.

This means it will cost a homeowner who wants to fix €20 a month more than it did for those who have fixed before today.

It is leaving its standard variable rate unchanged at 3.85pc.

The announcement from KBC follows Permanent TSB's announcement last week of a 1pc hike in its standard variable rate to take effect from March 7.

Permanent also suspended fixed-rate options for existing customers not already on one. It may re-introduce fixed rates but they are set to be priced so high they will be unattractive.

Ulster Bank is hiking its variable rate by 0.5pc on March 1, it said last week.

Irish Independent