A LEADING lender is to re-introduce mortgage switching. KBC Bank will become the first bank in five years to allow people to move their mortgage to it, the Irish Independent has learned.
The Belgian-owned bank will pay €1,000 towards the legal costs of homeowners moving their mortgage, and pay for a year's home insurance as part of the deal.
The bank claimed that some borrowers who switch to it could save up to €1,500 a year in repayments.
KBC gave an example of a homeowner on a 4.8pc variable rate with their current lender.
This person owes €140,000. They could save €1,525 a year if it they qualified to switch to KBC's 3.85pc rate.
This rate would be available if the homeowner's mortgage is 60pc or less than the value of the house.
During the boom, banks competed with each other to try and entice people to switch their mortgages, but the downturn meant the switcher market died.
KBC Bank, which is the only one in the country opening branches, claims its mortgage rates are the most competitive in the market.
The bank is also expanding by offering some of the highest interest rates on deposits and attempting to get thousands of people to move their current accounts. It has one of the lowest costing current accounts in the market.
The new switcher mortgage will only apply to those whose home is worth more than their mortgage. This will rule out the estimated half of mortgage holders who are in negative equity.
The freezing up of the switching market over the last five years has left thousands of homeowners trapped with their existing lenders and vulnerable to being hit with higher mortgage rates.
Head of retail products at KBC Bank Ireland Eddie Dillon said his bank was attempting to build market share. The lack of a mortgage switcher market cropped up regularly when it surveyed its customers, he said.
Financial adviser Karl Deeter of Irish Mortgage Brokers said most banks were closed to home-loan switching for the past five years.
"AIB won't even consider a switcher offer and Bank of Ireland will only take the very best customers," Mr Deeter said.
He said KBC was offering low-priced variable mortgage rates. He said the offer would mainly apply to those with older variable-rate mortgages, that were taken out before trackers dominated lending.
The bank has a range of rates, with lower ones for those with positive equity in their home.
KBC said a typical rate for someone whose home is worth at least 10pc more than the mortgage taken out on it would be 4.59pc, but rates are lower for those with more equity.
At 4.59pc the payments work out a €633 a month for every €100,000 borrowed, over 20 years. The average variable rate in the market is around 4.5pc.
The offer does not apply to buy-to-let mortgages.