KBC reduces rates for new customers only - not for existing customers

Brendan Burgess

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From: Karen Jones [mailto:KJones@gibneycomm.ie]
Sent: 09 September 2015 11:14
Subject: KBC Bank Ireland - Variable Rate Changes Notification



KBC Bank Ireland – Variable Rate Changes Notification

With effect from 15th September 2015, KBC Bank Ireland will reduce variable mortgage rates for new residential mortgage customers (first time buyers, movers and switchers). The following table illustrates the new rates available, including best value loan to value (LTV) variable rates from 3.25% (Current Account discount included).

Variable Rates for New KBC Residential Mortgage Customers:



· A cash contribution of €2,000 is available to customers switching their mortgage to KBC by 31st December 2015.

[ BB comment- I wonder why they did not put the small print in the press release?
https://www.kbc.ie/Our-Products/Mortgages/Bank-switchers

"**... If the mortgage is redeemed within 3 years of drawdown, KBC reserve the right to claw-back all or a portion of the €2000 paid. "]


· First time buyer, mover and switcher mortgage drawdowns can avail of 50% off KBC Home Insurance for 1 year for new residential mortgages up to 31st December 2015.

· A new mortgage customer who opts for a variable rate of 3.25% can save €1,336 in Year 1, and €16,627 over a 20 year term on a €300,000 mortgage by availing of KBCs new <50% LTV variable rate of 3.25% (with a KBC Current Account).

Ends
 

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An existing SVR customer of KBC, who is paying 4.3%, must be very annoyed when they see new customers paying as little as 3.25% and they are not allowed to avail of that rate.
 
Might be worth adding to the above post-

If you are switching to KBC and you get the €2,000 offer - you are locked in for 3 years. If you move within the 3 years you have to repay the 2K. The have a clause in their T&C's.

The competition for switchers is heating up!!
 
As a current KBC customer could I switch away (and pay about €1200 legal fees) then switch back (and pay €1200 legal fees), get the €2K offer so the total cost is about €400 to me and get my mortgage reduced by 1.05% saving me over €2000 a year.

On second thoughts once I switch away I'm never going back to KBC.
 
If AIB or EBS had a switching offer I would leave KBC to get the better rates in October...
KBC = Worst bank ever!
 
Toshsmith said:
If you are switching to KBC and you get the €2,000 offer - you are locked in for 3 years. If you move within the 3 years you have to repay the 2K. The have a clause in their T&C's.
Click to expand...

Tosh

Well spotted! I had completely missed it and have now edited their press release accordingly.


Brendan
 
@Brendan...

Website won't let me post a link but it is true.

**€2000 payment is available to customers who switch their mortgage to KBC between 1st July and 31st December, 2015 only. Payment of the full amount due will be made to the customer within 30 days of the mortgage drawdown. If the mortgage is redeemed within 3 years of drawdown, KBC reserve the right to claw-back all or a portion of the €2000 paid. This offer excludes Buy to Let properties.
 

And they screw many of their existing customers with some of the highest svr rates in the country at 4.5%.
 
Despite this, because KBC currently have the best variable rate, there will be many people (incl. myself) considering moving to KBC.

I'm currently on a variable of 4.5% APR with BOIreland; so moving to KBC seems like the logical thing to do.
I know there's a chance KBC will increase my variable rate after I move to them, but then I'd look at switching provider again & let them clawback the 2K legal fees.
 
Again it's the people who can't move because of negative equity or ltv > 90% who are bring screwed. Agreed everyone who can switch should be looking around at their best options. If you can't switch though you are still on the rack - kbc, ptsb etc.
 
This is the third time this year that KBC have reduced their LTV mortgage rates, but only for new customers. As soon as you switch to KBC you become an existing customer, and so will not benefit the next time that they reduce their rates for new customers.

If anyone is thinking of switching to KBC, i would think long and hard about it, as they treat their existing customers terribly. Other banks, i.e. AIB, EBS and Ulster bank at least offer existing customers the same rates as new customers.
 
Subotai said:
Other banks, i.e. AIB, EBS and Ulster bank at least offer existing customers the same rates as new customers.
Click to expand...

And ptsb since the last rate cut.

Ulster Bank is unique in that it allows existing customers move to a lower rate if their LTV reduces. AIB and ptsb stick you to your original LTV for the life of the loan.
 
I rang KBC a couple of months ago asking if a new customer joined would they stay on the new rates or did they go back up to the high rates after a year. They said new customers would keep the better rates.
Is this true? Do people who have joined a couple of months ago now automatically go onto the new rate.

Or do they now have three tiers
1: Screw the customers who are stuck with us. Otherwise known as the Existing Customer Rate.
2: New rate. Customers who joined a few months ago.
3: Newer rate. In the original post.

I suppose they'd have to keep giving the newer customers the newest rates. Or else it'll get very confusing in a year or two when there are a few more rate updates.
 
Hi Mick

They have a huge variety of rates.

1) Long-term customers - SVR of 4.5% - don't get Wednesday's rate reductions.
2) A "new" customer last week on 90% LTV - pays 4.1% - doesn't get Wednesday's rate reductions
3) A new customer today on 90% LTV - pays 3.85% - but won't get future reductions.
 
As a customer who moved to KBC back in May to avail of the 3.55% rate (<50% LTV), obviously I am very disappointed with the latest move. I have not yet contacted them, but my first step over the weekend is to validate whether or not there is a clause in my mortgage offer on the clawback of the 1000 euro legal fees paid. I don't remember seeing it, but will need to double check.
After this, I think its time to visit either AIB or Ulster Bank and see what they can do for me.
Then its a call to KBC, and ask them whether they wish to keep me as a customer or not. If not, then its easy to move. I done it in May, I can easily do it again.

I have also emailed both the current Fine Gael TD and other candidate in my area on this issue (following up an email from a fortnight ago), stating they are the only ones who can stop the abuse of existing customers before the election, and there is absolutely no way I could consider voting for them in the GE unless they tackle this issue head on before then. Sadly, my faith in they appetite to address this issue is low !
 
You should certainly switch again, in my opinion, if it makes financial sense to do so.

I am somewhat puzzled why people are so annoyed that a lender might offer a better rate to a new customer (unless their loan agreement provides otherwise). I don't remember people getting annoyed when lenders started offering lower margin trackers to new customers or lower fixed rate mortgages.

If a rate charged by a lender is no longer competitive, the solution is simply to refinance with another lender. This is a particularly attractive option at the moment as many lenders will more than cover the costs of switching.
 
Sarenco said:
I am somewhat puzzled why people are so annoyed that a lender might offer a better rate to a new customer
Click to expand...
@Sarenco - in my personal case, I obtained a LTV<60% Variable Rate mortgage from KBC. This product is variable by its nature, meaning the interest rate can go up as well as down based on the prevailing market conditions. I appreciate the wording of the mortgage may be closer to "as the bank feels like it". This same product "LTV<60% Variable Rate mortgage" has now a reduced interest rate, yet the bank have decided this 'movement' does not apply to me even though I am on the exact same product.
I don't remember anything in the mortgage terms stating the minimum interest rate I would pay would be 3.55%, and that only upward interest rate adjustments would apply. I also do not see anywhere in the terms that I am on a 0.95% discount to their standard SVR rateof 4.5%.
The reality is that KBC (and BOI like them) are being disingenuous regarding the concept of 'variable' here, and if the same product sees an interest rate reduction, this should apply to all persons on that same product.
If I had signed up for a different product - say SVR or LTV<85% (if one existed), that did not have an interest rate cut, then I do see this as a different scenario.

Sarenco said:
If a rate charged by a lender is no longer competitive, the solution is simply to refinance with another lender
Click to expand...
I think this is a very simplistic view to be perfectly honest. This may be the case for changing your current account or changing your credit card, but changing your mortgage is a lot bigger than that. It takes time to put applications together, and the banks are now imposing restrictions in the clawback periods in place. There are solicitors to engage, and processes to be followed, paperwork to be obtained etc.

And yes, of course everyone has the option to switch lenders, but to be fair they should not have to. But of course fair is something most financial institutions do not understand, and in turn loyalty is quickly diminishing for them.
 
Sarenco said:
If a rate charged by a lender is no longer competitive, the solution is simply to refinance with another lender. This is a particularly attractive option at the moment as many lenders will more than cover the costs of switching.
Click to expand...

It costs roughly €1200 -> €1500 to switch. Each and every time. So if your lender is messing you about you've to pay the fees to switch. Then if your new provider is noncompetitive you've to pay all over again.
Yes a lot of lenders will cover the cost of switching, if you stay. KBC have obviously enticed a lot of people over in the last few months and now that they have them, they've dropped their rates. Those people probably have clauses in their mortgages saying if they leave, they've to refund KBC the cost of the original switch.
On top of this, switching a mortgage is a major pain in the hole. Most people don't bother or don't keep up to date. People will go out marching against water charges but won't (or don't know how to) spend an hour in Excel to see how they can save 1 or 2 or 3 times the water charge each year.

I agree with your basic premise though, it's business. KBC don't have any obligation to be nice to customers. They have an obligation to make a profit. They will only be nice enough to ensure they keep their profit.

All we can do is
1: Hound our TDs, who aren't going to do anything really.
2: Switch ourselves.
3: Tell everybody we know how KBC work so they can make an informed decision when taking out a mortgage.

I personally think that KBC will change their tactics. This is not good publicity for them and it must be a nightmare for their admin staff. I'm an older customer so I'm on one rate, customers who joined 6 months ago are on another, customers who join next week are on another. What happens in a year? This sounds like a mess to manage.

Now that they have multiple products their mortgage arm is probably affecting their banking and home insurance departments. I set up a KBC current account a few months ago. I was about to switch over everything from my old account when they announced a rate cut for new joiners and basically said screw the existing customers. So I didn't bother. I just did the minimum to get the .2% cut. As soon as I switch my mortgage I'll close my KBC current account and I'll never be back. My home insurance was due last month and I got the KBC flyers in the door. They went in the bin. The company I went with was €20 more for the year but I figured I'm paying KBC an extra €120 a month on my mortgage so I won't be using any of their other products ever again.
 

While I don't have any insight into KBC's pricing strategy, I certainly agree that it seems to be perversely complicated and is clearly annoying people to the point that it must become counter-productive at some point.

I guess what I find interesting is that borrowers that secured what they considered to be a good deal at a particular point in time get so annoyed when other borrowers get a (marginally) better deal some time later with the same bank. I don't remember anybody getting annoyed when banks were cutting margins on trackers or fixed rate mortgages - same product, different rates.
 
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