Monday 19 February 2018

Last lender pulls the plug on cash deal to switch mortgage

Charlie Weston Personal Finance Editor

THE last lender to offer a financial incentive to mortgage holders to switch has dropped the deal.

KBC Bank said it would end its €1,000 switcher offer for those moving a mortgage to it from next Friday, March 4.

The lender has also suspended one of its fixed rates and increased the variable rate for new customers, as the mortgage squeeze gets worse.

KBC Bank, seen as one of the most active in the mortgage market, blamed the high cost of wholesale funding for the move. It said the latest changes would not affect existing customers.

It was encouraging those who had equity in their homes to switch to it by offering €1,000 toward the legal cost of moving a mortgage, but the move to end the incentive means no lender is seeking switcher business.

Home-loan experts said some lenders would still accept a switch for those who owed less on their mortgage than their home was worth, but stressed there were virtually no switches taking place at the moment.

Anyone trying to switch would need to have a mortgage worth at least 20pc less than the value of their home.

Last year, AIB said it would no longer accept mortgage switches, with most other lenders closed for switches.

Frank Conway, of the Irish Mortgage Corporation, accused lenders of "rushing for the doors" as far as mortgages were concerned. Funding difficulties meant they were reluctant to lend. Operations director of Irish Mortgage Brokers Karl Deeter said EBS and KBC would still accept switches but no longer offer an incentive. EBS dropped its switcher offer last year.

"This is the final death knell of loan incentives in the mortgage market. Now, far from wanting your business, banks want to find ways to turn you away or charge increasingly higher rates," Mr Deeter said

He said switching offers and fixed rates were going to be the victims of this year's mortgage market. "The last switcher offer just died, and fixed rates are being whittled away."


KBC Bank also said it would no longer offer its customers the option of fixing for five years. It has also hiked its variable rate for new customers. The discounted variable rate goes up by 0.25pc to 3.55pc from Monday. It hiked its fixed rates for all customers just weeks ago, but has not changed its variable rate.

Earlier this week it emerged that Ulster Bank hiked its fixed rates by up to 0.8pc, as more banks try to discourage homeowners from opting for the safety of set monthly repayments.

This follows increases in fixed rates by Permanent TSB, with EBS suspending the option of fixing. And AIB and Bank of Ireland are expected to increase rates in the next few weeks.

Irish Independent

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