KBC new 10 year fixed rate

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Finally some decent rates on long term fixed rates.
10 year rates from 2.95% with KBC. BoI are only other 10 year fixed rate, starting at 3.8%.
No news yet on movement of other fixed rates.
10 year rate is now lower than 5 year...

http://m.independent.ie/business/pe...kbc-offering-10-year-fixed-rate-36150149.html

Separately, from analyst coverage, 70% of KBC new mortgages this year have been at fixed rates, with 5 year being most popular.
 
KBC BANK IRELAND LAUNCHES NEW MARKET LEADING 10-YEAR FIXED RATE PRODUCT AT 2.95%

Majority of new mortgage customers now opting for fixed rate mortgages

19th September 2017: Following on from interest rate reductions to a range of fixed interest rates in May 2017, KBC Bank Ireland today announced a new market-leading 10-year fixed mortgage offering to provide even greater value and certainty for customers over the long term. From 2nd October 2017, customers with an LTV <60% can fix the interest rate on their mortgage for as low as 2.95% for ten years while customers with an LTV <80% can avail of a rate of 2.99%. This comes as KBC confirmed that 70% of all customers drawing down a mortgage in the last three months opted for a fixed rate.

The new rates are available to both existing and new mortgage customers of KBC, whether they are currently on a variable rate or arrive at the end of an existing fixed term rate. The rates are inclusive of a 0.20% mortgage discount rate for customers holding a current account with KBC (and mandating their salary to that account).


KBC also has some of the best variable rates for new mortgage customers in the market, including 3.10% for customers with a maximum LTV of 80% and a one-year fixed rate of 2.90% for new and existing customers.

Darragh Lennon, KBC Bank Ireland Director of Products said “As Ireland’s leading challenger bank, our strategy is consistently about providing customers with long term value on their mortgage. We are seeing strong demand from customers who want to fix their mortgage repayments and this has increased significantly this year. With the introduction of these new market leading 10 year fixed interest rates customers can get certainty about their mortgage repayments over the long term at a rate that is as low as many short term fixed rates. Our team is ready to talk to customers about their mortgage or any of their financial needs on a 24/7 basis and are confident this new product offering will appeal to a broad range of mortgage customers”.

Any customers making the switch to KBC to save on their mortgage repayments will benefit from a €3,000 contribution towards their costs of switching their mortgage. The contribution is open to any customer who drawdown their mortgage by 31st December 2017.

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It would be very interesting to get a comparable rate for 10 years <60% in some other eurozone country.

I reckon it's still about 0.5% too high. But that is not as big an overcharge as others.

Brendan
 
This new 10 year fixed rate says a lot about what KBC think is likely to happen with interest rates over the next 10 years.
 
This new 10 year fixed rate says a lot about what KBC think is likely to happen with interest rates over the next 10 years.

Do we know if KBC have secured fixed rate financing themselves to support this rate over 10 years or will they need to refinance on an ongoing basis.

If they have say issued a 10 year bond to support this then it does not tell us much about their view of future rates. If on the other hand they will be refinancing on an ongoing basis then certainly it says a lot about their view of future rate movements.
 
So for less <80% LTV the new 10 year rate at KBC is 3.15% if you don't want to have a KBC current account?
Even with the €3,000 cashback from KBC, I think I'd prefer fix with BOI for 3 years at 3% with 2% cashback. I'd like to keep my transaction-free current account with PTSB.

As a matter of interest, do KBC allow mortgage over-payments for fixed rate customers?
 
This is food for thought. At the moment i'm on a rate of 3.00% for a <60% LTV with KBC. So the 10 year rate of 2.95% is only a marginally better interest rate for me. But then there is certainy of the repayment rates for 10 years. But the question is - will they reduce their variable rates any mroe? Or is that it for the foreseable future?
 
They must be betting on rates going down more. Seems to be a price war at the moment which is good for all of us mortgage holders. What is the most they will drop can't go lower than 2.5% but question is what is the most they can rise they definitely can rise again to 3.5% 4% and the rest. Only God knows what is going with happen post brexit-and the future of the EU
 
They must be betting on rates going down more. Seems to be a price war at the moment which is good for all of us mortgage holders. What is the most they will drop can't go lower than 2.5% but question is what is the most they can rise they definitely can rise again to 3.5% 4% and the rest. Only God knows what is going with happen post brexit-and the future of the EU

I am not convinced; how many people would be tipped into major trouble if rates increase too quickly?

I also don't see 2.5% as the floor. Look at the rest of Europe.
 
This new 10 year fixed rate says a lot about what KBC think is likely to happen with interest rates over the next 10 years.
Not at all. KBC will fully hedge this in the market, with swaps maturing out to 10 years based on their modelled repayments. The 10 year swap rate is about 0.88% at the moment.

All this means is KBC are willing to take a lower margin on 10 year rates, than other terms. This way they get to be a market leader without taking on a competitor too directly, and lock-in a degree of certainty for themselves especially where customers take a current account as well.
 
Would have to disagree Gordon. What other EU country would let you live in a house for years without making any mortgage payments, just have to shout victim and the courts will let you live free in this country. That has be be priced into rates here so can't see it going below 2.5 unless the courts start to change which won't be happening any time soon
 
We are seeing strong demand from customers who want to fix their mortgage repayments and this has increased significantly this year.
As a quote from KBC, this does not surprise me. KBC have shown in the last few years that they do not always offer new and existing customers the same rates, and therefore many now treat them as an upward only variable rate option. Fixing is a better option in this case, and they should compete head to head with BOI. I do accept that KBC currently does have the existing customer offer, but there is no guarantee this will continue into the future. It is also worth noting that on the existing customer offer (at least), the customer would roll over onto new business rates when the fixed term expires. I imagine brokers are now wise to the way KBC work, and are advising customers accordingly.


It would be very interesting to get a comparable rate for 10 years <60% in some other eurozone country.
I reckon it's still about 0.5% too high. But that is not as big an overcharge as others.
I agree it would be an interesting comparison, but probably not a valid one. We all accept that repossessing properties here is a difficult ask, as well as the practice of paying to switch rather than the mortgage holder paying an arrangement fee. We need to be conscious of this in any comparison
I agree that for a LTV<60% it is still high - by around 0.5%, but for a LTV 60-80% I would say its a pretty good deal at 2.99%. I would argue that someone on a 25% LTV is not a 0.04% risk weighting below someone on a 75% LTV.

I'd like to keep my transaction-free current account with PTSB.
KBC have free banking if you lodge 2500 in each month (Extra Current Account). You could simply bounce your salary though that account to PTSB and use the KBC one as a psuedo cash-save account if you wished. Depending on the size of your mortgage, that 0.2% is valuable. On a 250k mortgage over 25 years it is 325 euro a year in extra interest paid. That's a meal out once a quarter or a hotel break once a year, and much better in your pocket than KBC's.
 
But the question is - will they reduce their variable rates any mroe? Or is that it for the foreseable future?
Seems to be a price war at the moment which is good for all of us mortgage holders. What is the most they will drop can't go lower than 2.5% but question is what is the most they can rise they definitely can rise again to 3.5% 4% and the rest.
I also don't see 2.5% as the floor. Look at the rest of Europe.
That has be be priced into rates here so can't see it going below 2.5 unless the courts start to change which won't be happening any time soon

This is a difficult one. When the Fair Rates Mortgage campaign started, SVR's were in the above 4.5% and if you were not on a tracker, it was very difficult to get a rate below 4%. European rates were half of this, floating around the 2% mark.
There are rates of 2.6% floating around now between BOI (including cash back) and Ulster Bank, but most are floating around the 3% mark for most LTV's. Those in negative equity have to fix in reality.

I would agree that I would see 2.5% as the floor really for rates in Ireland in the short term - and happily have taken it 2 years ago. While European rates are lower, we all accept the repossession issue, the cost of going business/compliance here is higher, lack of arrangement fees never mind incentives to switch, size of the market, political interference, historical debt impairment issues etc.

I see this move by KBC as a very positive one, and hopefully there will be a reasonable take-up on it, especially at the 60-80% LTV where I do think it is good value over a 10 year time frame (taking into account international instability and historic low interest rates). I am in favour of long term fixed rates for most customers, combined with a change in behaviour for people to switch once this fixed term is up.

If someone on a 79% LTV took out this mortgage over 25 years (fixed for 10), and paid the 10% over payment permitted, at the end of the 10 year period their LTV would be less than 49%, assuming the house price did not fall. This would support them refinancing the mortgage at a 50% LTV, ideally for another 10 years.


The question is will other banks bring out similar products to compete with KBC - the answer is BOI will probably do so as they want to seriously play in the fixed space. I am not sure about AIB and Ulster Bank as they appear to be more variable focused. Who knows with PTSB...

Another big question is what would the break fee be if you wished to break this in 1-2-5 years time. With cost of funds being quite low at the moment, I don't expect this would be a high charge unless interbank rates continue to go further negative
 
Silly question...
If KBC allow you 10% overpayments and my current repayment is €1500 per month, I am allowed overpay by a further €150 per month. Is this correct?

For me, this would certainly be a drawback to fixing for 10yrs.

What overpayment limits do BOI have on fixed customers?
 
All will have an amount that you can repay before they trigger a break fee calculation. This might be an actual amount per annum, or a percentage of your repayment, but all are relatively small.
However, they don't prevent you overpaying more - it just triggers a break fee calculation. However, in the current interest rate environment that might be zero. Nobody has a crystal ball, but say if rates are higher 5 years from now, and you want to repay - the probability is you wouldn't have to pay any penalties. However if rates remain the same, or fall, then you could face a penalty.
 
If I'm going to make a 10yr commitment, I'll need more certainty regarding overpayment limits. I don't want any prospect of penalties.

I actually only plan on overpaying by €150 per month but this is slightly over 10% of my repayment. I will be instructing the lender to reduce my future repayments too so the same €150 will be further past 10% every month, presumably triggering larger penalties.

Can't see any mention on the KBC website of a 10% overpayment limit. Just a warning that paying back loans early may trigger penalties.
 
Gordon,
I'd like to overpay by as much as I can afford. I figure this amount to be €150 at the moment but hopefully it will rise in line with expected salary increases over the 10yr period.

I was originally budgeting to save the €150 into a savings account to be used for my child's college expenses in 16yrs time, but I'm leaning towards Brendan's argument that it would be more prudent to first repay the mortgage to a 'comfortable' level, then stop overpaying and start saving aggressively for college expenses. I admittedly need to figure out what year I'm supposed to switch from overpaying the mortgage but maybe the most important thing for now is to start the overpayments.

I can see the attraction of having the certainty that fixed rates bring, and i don't think average variable rates over 10yrs will be less than 2.99%, but I would like to be able to overpay as much as I can afford without being penalised.
 
Check with KBC if they do a split rate mortgage. Put say 75% on fixed rate and remaining on variable rate. You can pay off as much as you want on variable rate at anytime and have certainty on a large chunk for 10 years.
 
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