typical KBC A Bank of Ireland mortgage borrower will be left worse off at more than €2,000 a year if his loan is sold Bank of Ireland And they go for a new interest rate fix After that, a consumer advocate told competition regulators as they checked the sale.
The sale of KBC’s Irish mortgages is currently being evaluated by the Competition and Consumer Commission (CCPC), which has sought to make representations about the implications of the deal.
« KBC’s exit from the Irish mortgage market will seriously reduce competition and lead to higher mortgage rates, » said Brendan Burgess, founder of consumer finance website Askaboutmoney, in his report.
If the deal goes ahead, Burgess said, it should be on the condition that the international investment bank operates KBC’s assets in full swing or the bank commits not to offer cash back mortgages and offer the same lending rates to existing and new clients.
Otherwise, KBC’s existing clients will be paying much higher rates on their mortgages, he said.
The sale won’t cause immediate changes in customers’ mortgage rates, but he said they will face higher interest in the future, including when their current two-, three- and five-year mortgage periods expire.
He cited the example of a typical KBC client who has a loan of less than 80% for his 300,000-euro mortgage whose fixed rate is set to expire today. They can fix again for three years at 2.3 pieces with KBC.
But he said they face an additional interest payment of 0.7 percent if their loan is with the investment bank, adding €2,100 extra interest each year.
Customers will have the option of switching to another provider, if they qualify for the new mortgage approval, but this is more complex and will also require legal work to secure the home loan for the new lender.
The planned acquisition by the Bank of Ireland of KBC Bank Ireland’s €9 billion assets is under scrutiny by the competition watchdog.
The so-called ‘Phase Two’ achievement of the CCPC, which could take more than four months to complete, is an unexpected hurdle in consolidating the Irish banking system as foreign-owned KBC and Ulster Bank exit the market.
If you leave KBC, Burgess said, it is better to have the mortgage book taken over by an active lender (such as BoI) rather than a trust.
KBC is being sold at the same time as Ulster exits the market and will leave only three retail banks in Ireland, an unusual level of concentration in most sectors of the economy and double that given the state’s bank equity stakes.
While non-bank lenders like Avant, Dilosk and Finance Ireland offer some competition in mortgages, their overall market share is less than 10%.
Belgian-owned bank KBC Ireland announced in April that it intends to leave the Irish market and is entering into a Memorandum of Understanding to sell its influential consumer banking business to Bank of Ireland.
AIB has entered into a deal to acquire Ulster Bank’s €4.2 billion business and corporate loan book, while TSB is negotiating terms for more than €7.6 billion in Ulster Bank’s mortgage, SME loan and asset financing business. NatWest can take a stake in PTSB as part of the arrangement.
These deals will also require CCPC approval.
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