# KBC cuts Fixed rates

#### Brendan Burgess

##### Founder

*all rates incorporate 0.20% current account discount available to customers

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#### Brendan Burgess

##### Founder
Here is a comparison

Ulster Bank gives €1,500 cash back to all customers
KBC gives €3,000 to switchers only.

If you are applying for a new mortgage, the best deal is Ulster Bank's 2.3% for two years or their 4 year fixed at 2.6% because of the €1,500 cash back.

If you are switching, then KBC is probably better. The additional €1,500 is worth .75% on a €200k mortgage.

If you are an existing KBC customer, then it's probably not worth switching. But you should apply for these lower rates.

Brendan

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#### Bronte

##### Frequent Poster
The 5 year fix at 2.6% is pretty good in an Irish context. For 60% loan to value. Unless of course one thinks rates are going to drop further. But then there's Brexit and what effect that might have on things. Still it's pretty cheap money.

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#### misemoi

##### Frequent Poster
I can't see anything about overpayment of a KBC fixed rate loan on their website, anyone got info on that ?

#### RedOnion

##### Frequent Poster
I can't see anything about overpayment of a KBC fixed rate loan on their website, anyone got info on that ?
Their terms and conditions allow overpayments up to 10% of the initial balance over the fixed period, before calculating if a break fee is due.

#### Zenith63

##### Frequent Poster
Wonder if somebody could help us understand how the break fees are calculated, I'm in a 3 year KBC fixed at the moment (2 years to go) so am curious how it all falls out. They say their break fee is calculated as follows -

B = (W - M) x T / 12 x A, where:
B = The Break Funding Fee.
W = The Wholesale Rate Prevailing at the date of the existing fixed rate applying to the loan was set.
M = The Wholesale Rate prevailing at the switching/redemption date for the unexpired time period of the Fixed Rate Period.
T = Period of Time in months to the end of the Fixed Rate Period.
A = Principal amount which is subject to the existing fixed rate and which is being switched or redeemed.

‘Wholesale rate’ means the rate per cent per annum which the Lender determines to be the market rate applying to an appropriate interest rate swap for the relevant time period.
So take an example (that just so happens to be close to my scenario ). Lets say you're 12 months into a 36 month fixed term at 3% on €400k and now the KBC release a 2.6% 3 year fixed rate offering. Would the break fee be -
(0.03-0.026) x (24/12) x €400k = €3200

I know I could ask KBC to provide a break fee calculation, just curious to work it out myself, but the main stumbling block seems to be the definition of "wholesale rate" - is it the fixed rate for the agreement you're in, or their variable rate at the time etc.

#### RedOnion

##### Frequent Poster
Hi @Zenith63
The wholesale funding rates are interbank rates available to KBC. It's difficult to get exact figures without paying for data from somewhere like Bloomberg. However, Swap rates are a very close proxy.
So when you fixed, the 3 year rate was about 0.01%.
Now the 2 year rate is -0.17%
So: 400k*0.18%*24/12=1440

But you would save 3200, so better off by 1760 over the 2 years.

You'll need to get the latest exact break fee from KBC, but looks worthwhile.

Would you mind updating once you've break fee so we can do an example for others?

#### Zenith63

##### Frequent Poster
Just gave KBC a call, they said they are inundated with calls from people looking to break fixed contracts . Reckons 24-48 hours for turnaround of a calculation.

One thing to note is that you need a property valuation from within the last 4 months to sign-up to a new fixed rate (to show you are within the requested LTV band), which costs €127.

Will update when I hear more...

#### Paul Reilly

##### Frequent Poster
Is it possible to switch to any of these products with just loan = to equity

#### mccoypat94

##### Frequent Poster
very tempted by the 5 year fixed, however I currently have a case 'pending' with the FSO.

If I was to take up the fixed rate offer would that affect my case in anyway?

#### Brendan Burgess

##### Founder
What sort of case is it and why might it be affected?

If it's for the restoration of a tracker it might be better to wait. Of course, you would argue, "I would not have fixed for 5 years had I known I was going to get my tracker back."

But in general, I believe in keeping things simple. Why not fix for one year as the FSO might not have decided by then anyway.

Brendan

#### mccoypat94

##### Frequent Poster
Yes Brendan , restoration of Tracker rate, argument based around the 'flyer' .

Im currently in absolute limbo as are many, and you are probably correct 1 year might be an option.

PK believes my case is strong but there is no certainty that I will have a postive outcome , so in the short term I am eager to save as much as I can on my mortgage.

#### mccoypat94

##### Frequent Poster
To avail of a fixed rate its complusary to get a valuation, even though I only had one done in 2017

#### mccoypat94

##### Frequent Poster
To take a fixed rate KBC insist on direct debit payments, I currently pay my mortgage by SO weekly rather than monthly and don't want to change.
Are they within their rights on this?

#### peemac

##### Frequent Poster
To take a fixed rate KBC insist on direct debit payments, I currently pay my mortgage by SO weekly rather than monthly and don't want to change.
Are they within their rights on this?
They can ask you to jump about like a monkey as a condition for a rate if they like.

Why not change the mortgage payment date to the 28th of the month? - That can be done with a phone call

On taking a fixed rate and then if you get a tracker back - the fixed rate becomes void. Or at least that was my own experience

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#### Coat

##### New Member
fixed
These new rates won't be available until 3rd September. So I'd suggest you request a break fee towards end of August and decide then. If break fee is less than 3,500 it'll be worthwhile. (It will be less than that).

I just phoned KBC there and was quoted a break fee of €1141.23 which is valid for ten working days. He said I would need a property valuation as expected .Will I need the services of a solicitor again does anyone know as I'm not switching mortgage provider?

#### Concrete

##### Registered User
Snotzer - no, you don't need a solicitor.

#### Coat

##### New Member
Thanks RedOnion. Much appreciated.

#### gsp119

##### Registered User
Brendan , would you mind me asking
what below refers to
restoration of Tracker rate, argument based around the 'flyer' .