KBC Mortgage, now BOI, being offered a "one-time variable rate" 3.05% coming off of fixed

#014917

Does anyone have experience with the "one-time variable rate" for former KBC mortgages? I am coming off of my fixed period in the 60-80% LTV bracket and have been offered this rate at 3.05%. It states that if I fix, this rate then becomes unavailable.

Considering the advertised variable rate is 4.2%, this is a massive saving, and I'm skeptical of it. I am considering fixing again and lock in a 3.6% - 4% rate with Avant, or is there some small text that means BOI have to offer a lower rate in this case?

L1011

Are there any other terms to that variable rate? If it is properly variable and you can change to something else you could just fix whenever.

My KBC 2.25% fixed expires the start of Feb, I had BOI before I switched to KBC so would be be expecting a rate offer three months out from expiry, so start November.

I can't go to Avant, I don't owe enough to move there, or to many other good offers actually. My current plan is to ask to increase the payments to the max they'll take from me and suffer for a bit, if they'll take double it'll be gone in three years at the <60% LTV rate; but if that rate goes up it would be difficult to do it in 3.

#014917

Sounds similar to my case. I am currently 2.3% fixed, which ends at the beginning of Nov, and they sent me the rates this week with the details, about 2.5 months ahead of the fixed term ending. There aren't really any other terms, it is an offer to reflect the price that KBC Variable Rate customers are now paying (which still seems low).

From the CCPC site, I found this in one of the docs [2022.05.23 BOI-KBC Determination - Short (Non Confidential)]:

2.3.3 For the avoidance of doubt, the Transferred Mortgage SVRs are variable rates which may change from time to time. However, BOI may not adjust the interest rates associated with the Transferred Mortgage SVRs other than by the same number of BPS by which BOI SVR customers who fall within the same customer cohorts are adjusted by BOI.

This leads me to believe that following the transfer from KBC to BOI, the rate reflected an older rate, that they can't raise the rate by more than what they'd raise the advertised BOI rate. Rates would need to increase by close to 1% to make it not worthwhile for me, so I guess it's a gamble on the liklihood of that happening.

SMdPP87

Hey,

Can I ask what you decided to do in the end?

Thanks

L1011

I was offered 3.25% variable, which is vastly less than any other deal I can get with my low remaining balance. So I went for that.

SMdPP87

Hey @L1011

Thanks for coming back to me.

My situation sounds similar to yours. KBC 3 year fixed term of 2.35% ending March 01st.

Have been offered one time variable rate with BOI at 3.30%.

By comparison, the 3 year fixed that they offered is 4.05%.

Seems obvious to me to take the variable. Guessing I could roll off that to a fixed rate at any stage if the variable was to increase significantly (am I correct on this?).

Would value your perspective here.

Thanks

L1011

https://www.boards.ie/discussion/comment/121594469#Comment_121594469

Yeah, you can change to a fixed whenever you want from a variable. You can also change bank without any break fees if you want to.

It would look like we're likely to be offered quite nice variables - a significant discount on the BOI published one - forever, basically.

SMdPP87

Thanks for that!

What’s your personal take on rate increase over the foreseeable? Do you see variables increasing over the next 6/12 months?

L1011

https://www.boards.ie/discussion/comment/121594508#Comment_121594508

Crystal ball time, but yes. Irish variables have not increased by as much as the ECB rates have increased, and I'm expecting maybe another .25 or so to come. ECB rate might start dropping from Summer but the variables won't drop for a good long time after

I'm not saying I'm any good at reading a crystal ball by the way!

SMdPP87

Ok, one final question for you I swear!

Supposing BOI increase their variable by .25; is it the practice to also increase their fixed rates in tandem?

My plan is to move to variable and ride it out over the next 2/3 years.

At some point in future I’m supposing I might need to move off variable to fix.

However I’m curious whether in such an event would I likely be rolling off my variable to what would be a much higher fixed rate, versus the offer I have available to me today (3 year fixed @ 4.05).

L1011

https://www.boards.ie/discussion/comment/121594563#Comment_121594563

I believe the fixed and variables are not that closely tied but I can't find old figures very easily.

Any time you don't take a medium/long term fixed, you're gambling that there'll be something better available in a few years. I imagine there'll be ~3.5%s available from other banks in 3 years.

I am not a financial advisor in any way, shape or form.

Part of why I'm going variable is to go a bit psycho on the payments as and when I have the cash, and cut down the remaining term hugely.

SMdPP87

Great thanks for sharing that info and all the best!

mikerd4

In a similar situation myself. I had a tracker with KBC and then moved. They put an extra percent on the tracker rate for the privilege of keeping it so it's now at 2.5% above ecb rate. That was fine when rates were low but I'm now paying 7%.

Rang BOI about something else and asked if there was a better option and they offered me the ex KBC customer once off low variable rate of 3.49%.

I got the usual warning of if I drop my tracker it's gone forever etc but as it stands with the tracker mover rate, the ecb rate would need to drop below 1% for me to be paying more.

I was literally wondering what the catch was, just waiting on the paperwork from them.