THE battle for mortgage customers is hotting up.
KBC Bank has cut some of its fixed rates.
The bank has reduced its three and five-year rates by between 0.2pc and 0.3pc, with the lower rates applying from the start of next month.
The new lower rates apply to first-time buyers, movers and switchers taking out new mortgages.
A borrower with a loan to value of less than 60pc will be able to borrow at 2.25pc, fixed for three years.
This assumes they use the KBC current account, which gives them a 0.2pc discount on their mortgage.
KBC said a customer with a €250,000 mortgage and a loan to value of 85pc, who selects KBC’s new five-year fixed rate of 2.5pc, will make an interest saving of €2,210 over the five years.
More banks are expected to cut rates in the coming weeks.
Last month Ulster Bank reduced its five-year fixed rate to 2.2pc for those borrowing more than €300,000.
This is the lowest mortgage rate in the market.
And recent entrant into the mortgage market, ICS Mortgages, reduced its three and five-year rates for first-time buyers, movers and switchers.
Daragh Cassidy of product comparison website Bonkers.ie said it was the second reduction from KBC in the last six months.
“This development is undoubtedly good news for mortgage holders who for too long have suffered with some of the highest rates in the Eurozone.
“The question now is whether the bigger banks like AIB and BOI will follow suit. My expectation is that they will as they’ll feel they have no choice.”
The latest figures from the Central Bank show that mortgage rates in this country have fallen below 3pc for the first time in years.
But there is scope for much deeper cuts, mortgage experts said.
New figures show home buyers in this country with new mortgage agreements are still paying double the average rate in the rest of the Eurozone despite the fall in rates.
This is costing the typical new buyer €2,000 more a year than their European counterpart.
The average rate paid on a new mortgage in this country was 2.88pc in December, the Central Bank said.
This was down 13 basis points on the same month in the previous year.
However, the average rate being paid in the Eurozone is half of the one in this country, at 1.37pc.