KBC Homeloans, the mortgage subsidiary of KBC Bank, is prepared to lend up to €1bn this year through two new mortgage products it is launching after imposing a virtual freeze on new business in 2009, according to mortgage brokers the bank met last week.

The lender indicated that it has an estimated €800m-€1bn to lend for 2010 and will be introducing a switcher mortgage and offset mortgage to its product mix to attract new customers and increase its 10% homeloans market share.

The move signals a return to the market after the Belgian-owned bank effectively shut down to new business last year amid rising arrears in Ireland, credit downgrades and a €2bn capital bail-out of its parent company by the Flemish government.

Sources said KBC had now reversed course and was "beating the bushes" for the "right type" of borrower.

New mortgage lending from all banks in 2009 was about €8bn, according to the Irish Banking Federation. Assuming KBC at least holds its portion of the market, the bank should issue about 4,000 new homeloans this year.

Brokers said KBC's new switcher mortgage will allow borrowers to consolidate up to €40,000 of other debts and will pay €1,000 towards legal fees.

The offset mortgage, called Saver Plus, will have a 2.45% variable rate but a loan-to-value limit of 80%. It also allows for withdrawal of overpayments.

Last year the Irish unit of KBC had the highest share of non-performing loans across the whole group.