KBC Bank hints at mortgage rate move for first-time buyers                  

It comes after the challenger mortgage bank, which has competed aggressively on mortgage prices against the main Irish rivals for a number of years, has been hit hard by the slump in the mortgage market as the economy was closed down amid the crisis. Picture: File picture

The chief executive of KBC Bank Ireland has hinted that the mortgage lender is planning to cut mortgage rates for first-time buyers in the coming weeks.

Peter Roebben said that it had attracted business in a difficult market from mortgage switchers and was now preparing to do something similar on pricing for a different segment of the market.

It comes after the challenger mortgage bank, which has competed aggressively on mortgage prices against the main Irish rivals for a number of years, has been hit hard by the slump in the mortgage market as the economy was closed down amid the crisis.

KBC Bank in Ireland posted a net loss of €55m in the first six months as it took on a huge impairment cost of €95m from the effects of the Covid-19 crisis.

The bank is owned by the Belgian-based group which also operates in a number of countries across continental Europe.

Mr Roebben said that after taking on the impairment losses that both the Irish bank and its Belgian parent still have substantial levels of capital reserves.

He said the expectations for the mortgage market were for lending to be 40% lower this year but that the bank was taking on more customers who during the Covid crisis were getting into the habit of dealing online with banks. 

That was positive for a digitally-focused like KBC, Mr Roebben said.

The bank’s impairment charge is still based on its early forecast that Irish house prices will fall 12% this year. 

However, he said the bank was slightly more optimistic in recent weeks and predicts a fall of 8% in house prices and a recovery next year, based on the pickup of demand in June and July as restrictions were lifted.

The bank has processed 7,300 customers who had applied for mortgage breaks and “as things stand” 10% to 20% of all the people who applied for mortgage breaks may need some form of restructuring of their loans.

Mr Roebben said that the bank would assess any new entrant into the Irish mortgage market.

“There has always been tough competition in the market and we have been the competition for many years,” he said.

Last month, Avantcard said it plans to offer mortgages for the first time in Ireland.

KBC said it was also sticking with plans to develop its new digital pension and investment business, with new products being readied after the summer.