"KBC mortgage holders should switch to another lender before it is acquired by Bank of Ireland."

Brendan Burgess

Brendan Burgess

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Statement by Consumer Campaigner: Brendan Burgess www.askaboutmoney.com



Today the Competition Commission gave the green light to Bank of Ireland to acquire KBC’s mortgage book.

The Commission’s decision made no reference at all Bank of Ireland’s practice of charging existing customers more than new customers which results in BoI charging much higher rates than KBC.



For example: A typical KBC customer who is on a <80% LTV whose fixed rate is due to expire today, could fix again for 3 years at 2.3%. The equivalent rate in Bank of Ireland is 3%. They will pay €2,100 in additional interest each year or €24,757 in additional interest if there are 20 years remaining on the loan.



My submission to the CCPC was ignored completely. It included:



  • It should be a condition of the takeover that the acquired entity is run separately from Bank of Ireland and that it continues to compete independently in the mortgage market. The new entity would continue KBC’s existing policies of not offering cashback and of not discriminating between new and existing customers.
  • Alternatively, if Bank of Ireland agrees to stop offering cashback and if it agrees to stop discriminating between new and existing customers across the entire Bank of Ireland group, then the acquired mortgages could be full integrated into Bank of Ireland.
What should a KBC customer do now?



They should wake up and begin the process immediately of switching to another lender – Avant and Finance Ireland have the best long-term and medium-term fixed rates.



Customers do not need to wait until their fixed rate is up to switch. There may be a small break fee but it will be well worth paying.



Brendan Burgess



Table 1 Comparison of KBC and Bank of Ireland rates for existing customers

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Brendan, can you clarify a little more "It would cost them a full 0.7% extra" Surely if the customer re-fixes at the same rate today then BOI will honor that and their fixed rate remains at 2.3% for the next 3 years. Surely BOI cannot simply move the customer onto 3%. They would have to honour the customers current contract I hope.
 
random2011 said:
Brendan, can you clarify a little more "It would cost them a full 0.7% extra" Surely if the customer re-fixes at the same rate today then BOI will honor that and their fixed rate remains at 2.3% for the next 3 years. Surely BOI cannot simply move the customer onto 3%. They would have to honour the customers current contract I hope.
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BOI's fixed rates are somewhere between 0.5 and .75 percentage points higher for existing customers then KBC rates.
Meaning, If your fixed rates ends very close after BOI has taken over the mortgage, your available fixed rate offers are significantly higher from one day to the next "just" because BOI bought the loan book.
BOI has overall worse rates for existing customer than KBC, hence KBC leaving the market will cost such customers real money when their fixed rate runs out.
 
newirishman said:
BOI's fixed rates are somewhere between 0.5 and .75 percentage points higher for existing customers then KBC rates.
Meaning, If your fixed rates ends very close after BOI has taken over the mortgage, your available fixed rate offers are significantly higher from one day to the next "just" because BOI bought the loan book.
BOI has overall worse rates for existing customer than KBC, hence KBC leaving the market will cost such customers real money when their fixed rate runs out.
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Ok that makes sense. I just re-fixed with KBC for 5 years. So it sounds like that wont change on day 1 with BOI which is what I thought Brendan was alluding to. Its a concern for anyone whose FR comes to end on Day 1 or later assuming they did not re-fix in.
 
If a column was added for Avant and Finance Ireland, the savings from the potential cost with Bank of Ireland would be eye-watering and a wake-up call for anyone paying high variable rates.

Though it has to be accepted that some people may not be able to switch and they should immediately look at a 5+ year fix with KBC which is a simple phone call.
 
Is there a timeline on the date of sale? Am not in a position to switch to Avant until August, could break and re fix with KBC now but would rather wait if at all possible.
 
Paul F said:
@Seaniemed May I ask why you are not in a position to switch until August?
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2 year hiatus from HSE salaried post to engage in research funded by a bursary, with self-employed role in addition. Basically for the past 2 years I've had 3 income streams (research bursary, university lecturer and self-employed professional services role) which will come to an end in July. Haven't approached a broker yet but presume it would be easier to wait. I should probably ask though!
 
Have 1 year and 3 months left on my fixed rate with KBC, rate is 2.5% (Can't remember if that includes the current account discount).

Is it worth switching now?
 
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