KBC Ireland to raise mortgage rates

Mortgage holders are facing new hikes with the news that another provider is raising interest rates.

Belgian-owned KBC Bank Ireland said today it would raise its variable interest rates and increased fixed rates for new customers and existing ones seeking to move to a fixed rate.

From May 1st, variable rates will rise from 3.24 per cent to 3.65 per cent for owner occupiers, and from 4.29 per cent to 4.50 per cent for investors.

Fixed rates for the mortgage company will move to between 3.45 per cent and 4.95 per cent for owner occupiers from April 19th. Investors' rates are rising to 4.99 per cent.

“The increases in our rates reflect the continuing pressures on the cost of funding to lenders," KBC's John Delaney said.

On a 30-year term variable rate mortgage of €200,000, the increased rates will add an extra €45.60 to repayments for new borrowers.

The Irish Broker Association (IBA) today criticised the latest hike. saying rising mortgage rates risked stifling recovery.

"When it comes to increasing profit margins, consumers appear to be fair game for our banks, though at least KBC are actually open for new business, in stark contrast to most other institutions. This may have tempered their increase which is slightly lower than that from other banks," said IBA chief executive Ciaran Phelan.

"These mortgage repayment increases have come just at the point when consumer confidence was showing some sign of recovery, and unfortunately these sharkish increases will scare off many of those who were considering re-entering the consumer market, thereby stifling our economic recovery."

The move comes after EBS and Bank of Ireland said they would also increase rates.

The building society is to increase its standard variable interest rate by 0.60 per cent, from 2.63 per cent to 3.23 per cent, from May 1st. Fixed rate and tracker mortgage rates will remain unchanged.

Bank of Ireland mortgage-holders will see 0.5 per cent added to the standard variable rate, bringing it to 3.1 per cent from April 16th. Fixed rates will rise between 0.35 per cent and 0.5 per cent, the bank said. The new rates will also affect mortgage holders with Bank of Ireland's subsidiary ICS Building Society.

AIB has also recently hiked rates, adding by 0.5 percentage points to its standard variable rate and increasing fixed rates by 0.24 to 0.46 points.

Permanent TSB was the first bank to begin increasing its mortgage interest rates, with a 0.5 point increase in its standard variable rate in February, and a half-point hike last summer.

The Professional Insurance Brokers Association (PIBA) said mortgage holders should review their current situation, with speculation that rates could rise between 0.25 and 0.5 per cent by the end of the year.

PIBA Mortgage Services director Rachel Doyle said consumers should be in no doubt as to what the future holds.

"Both variable and long-term fixed rates are on the rise, so delaying a decision may be costly," she said.

"Fixing at a good rate for longer terms gives security and enables better planning. Shorter term fixing could leave you exposed to a large jump in repayments within a relatively short period of years."