‘Good time’ to opt for fixed home rates, says expert

It is a good time for mortgage borrowers to look to fix the costs of their home loans, an expert has said after KBC Bank announced cuts to its fixed rates for new and existing customers.

Michael Dowling, chair of the mortgage committee at brokers’ group IBA, said that existing customers could tap the largest benefits by switching into their banks’ long-term fixed years of three or five years.

For new and existing customers, KBC said it has cut its two-year fixed rate by 0.25%, to 3.4%; cut its three-year fixed rate by 0.35%, to 3.3%; and reduced its five-year fixed rate by 0.2%, to 3.55%.

It said the reductions were designed to encourage customers of rival banks to switch to KBC. Mr Dowling said the cost of an updated valuation was “a small price to pay” for existing customers to tap competitive long-term fixed rates.

There was a “compelling case” for borrowers to consider switching to fixed rates though there was still room for lenders to sanction further reductions in fixed rates. Mr Dowling said that Permanent TSB, Ulster Bank and Bank of Ireland were competitive for fixed rates at three and five years, while AIB was still leading in its offering in variable rate mortgages.

Depending on the loan-to- value ratios, AIB’s variable rates ranged 3.1% to 3.5%, he said.

It was encouraging that competition between lenders was helping to drive rates lower, Mr Dowling said.

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