KBC customers are advised to consider switching before the Bank of Ireland takeover is complete

KBC mortgage holders have been advised to consider switching lenders before their mortgages are purchased by Bank of Ireland.

Consumer advocate Brendan Burgess’ advice comes after competition regulators cleared KBC Bank’s billion-dollar mortgage sale to Bank of Ireland.

Mr Burgess claimed that the Bank of Ireland’s “very high interest rates for existing customers” and its practice of charging existing customers more than new customers would result in a huge increase in mortgage repayments for KBC customers if the mortgages went to the Bank of Ireland pass Ireland.

If approved, Bank of Ireland will take over KBC’s bad loans, including mortgages, its deposits and a small number of bad loans.

One of the conditions imposed by the competition regulator is that KBC mortgage customers are entitled to the same fixed interest rate as they received from KBC for the remainder of their mortgage term.

Customers benefiting from a 0.2% discount for holding a current account with KBC can transfer this to Bank of Ireland without having to have a current account with Bank of Ireland.

Bank of Ireland has also committed to offering KBC customers equivalent floating rate and fixed rate options on their first post-migration rollover.

But Mr Burgess said KBC customers would still lose out on the deal.

He said a typical KBC customer whose fixed rate expires today, who has a loan value of less than 80 per cent, could fix it again at 2.3 per cent for three years.

The Bank of Ireland equivalent interest rate is 3pc.

As a result, the customer pays 2,100 euros in additional interest annually.

Over the remaining 20 years of the loan, the additional interest charge is €24,757.

Mr Burgess said his submission to the Competition and Consumer Protection Commission had been “completely ignored”.

His submission had called for the acquisition to be subject to a condition that Bank of Ireland treat the KBC mortgages it acquires as a separate entity.

“The new company would continue KBC’s existing policy of not offering cashback and not discriminating between new and existing customers,” it said in its statement.

He said people whose mortgages are switching to Francesca McDonagh-run Bank of Ireland should switch providers.

“You should wake up and start switching to another lender right away – Avant and Finance Ireland have the best long-term and medium-term fixed rates,” he said.

Customers don’t have to wait until their fixed price is available to switch. There may be a small break fee, but it will be worth paying, he said.

Some customers cannot switch due to various reasons.

You should consider an immediate fixing with KBC as Bank of Ireland is contractually bound to this fixed rate for the remainder of the fixed rate period.

Asked about Mr Burgess’s concerns, Bank of Ireland said that KBC Bank Ireland customers with mortgages or loans forming part of the transaction would be subject to final approval of the transaction to Bank of Ireland at the price of their KBC product at the time of the transaction Transaction will migrate migration.

KBC Bank Ireland customers who benefit from a mortgage or loan interest discount associated with holding a KBC Current Account retain this discount for the duration of the mortgage or loan.

Bank of Ireland will also offer KBC Fixed Rate Mortgage customers on their first post-migration roll-over the floating rate, which will match that of KBC migrated variable rate customers, as well as fixed rate options from Bank of Ireland.