Fresh hike in mortgage rate as house prices rise

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Fresh hike in mortgage rate as house prices rise

THOUSANDS of mortgage holders face higher repayments after KBC Bank became the latest lender to hike its interest rates. The Belgian-owned bank will increase its variable rates by 0.25pc from the start of April in a move that is set to cost a family with a €200,000 mortgage an extra €360 a year.

The mortgage move came as a new survey pointed to a rise in house prices in Dublin, sparking hopes that five years of falls in values are at an end.

KBC Bank said existing residential customers will see their repayments rise from the start of April. New and existing variable rate customers will now have an interest rate of 4.5pc. Buy-to-let customers will also face a rise of 0.25pc, with their rate going to 5.15pc. KBC chief executive John Reynolds said it was the first time since December 2011 that his bank had increased rates. He blamed the continuing high costs of funding mortgages in this market. He said the average monthly increase in repayments for KBC mortgage customers will be €22.

“We recognize that some customers may be concerned about their ability to meet their revised mortgage repayment schedule. “We have resolutions in place to assist these customers and our priority at all times is to help customers meet their mortgage repayments to the bank thereby protecting their family home,” Mr Reynolds said. AIB and Bank of Ireland both hiked variable rates last year.

Meanwhile, a survey from estate agents Douglas Newman Good (DNG) found that prices paid for second-hand houses in Dublin rose by 2.2pc last year after the last three months of the year saw strong demand. It said that, based on its own survey, the value of second-hand houses in Dublin increased by 3pc in the final three months of 2012.


DNG said that the average value of a house in Dublin was €258,529. There was a strong rise in buying in the last three months of 2012 as first-time buyers scrambled to qualify for mortgage tax relief, which has now been withdrawn. DNG’s Keith Lowe said he expects prices to rise modestly this year in Dublin and other urban areas, due to limited supply and higher lending targets from Bank of Ireland, AIB and Permanent TSB, and to a lesser extent from Ulster Bank and KBC Bank. According to the report, 2012 also showed an increase in residential market activity across the country.

Source: Charlie Weston Personal Finance Editor


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