Calls to ban banks giving best deals to new customers
Finance Minister Michael Noonan has been called upon to introduce immediate legislation to stop banks excluding existing mortgage customers from good-value rates.
KBC Bank yesterday cut its mortgage rates for new customers, but failed to lower rates for existing customers.
The Belgian-owned bank reduced its variable rates by 0.20pc for first-time buyers and those switching to it, as well as those moving home.
The reductions will mean KBC will have the lowest mortgage rates for new customers in the market, for those prepared to move their current account to the bank.
But it continues to have one of the highest variable rates for existing customers.
Brendan Burgess of the Fair Mortgage Rates Campaign said it was a disgrace that existing, loyal KBC customers would continue to pay 4.3pc, while KBC was offering a rate 1pc lower to some new customers.
"Those customers who are tempted to switch to KBC should think long and hard about it.
"Once they draw down their mortgage, they will be existing customers and will not benefit from any further cuts in rates."
The new KBC rates mean that customers get a lower rate if they have a lot of equity built up in their home - so-called loan-to-value (LTV) rates.
The bank said its 50pc LTV variable rate will drop from 3.7pc to 3.45pc. The 80pc LTV goes from 3.80pc to 3.65pc.
Mr Burgess called on the Government to introduce legislation immediately to ensure that lenders allow existing customers avail of the rates on offer to new customers who meet the same LTV criteria.
Mr Noonan is set to again meet with all the banks before the October Budget.
It follows meetings in May when he demanded lower variable rates for existing customers, in line with lower costs of wholesale bank funding.
Mortgage broker Michael Dowling of Abacus said the Government attempts to force down variable rates for 300,000 mortgage holders had not been successful.
"The pressure from the Government has not worked. Bank of Ireland and KBC have not changed their variable rates.
"They have offered incentives as a smokescreen, instead of reducing variable rates," Mr Dowling said.
He said the only way variable rates for existing customers would come down is if homeowners switch lenders.
Karl Deeter of Irish Mortgage Brokers said: "Now, more than ever, people need to switch their loans, seek better pricing."