Mortgage holders ignoring €3,000 in savings
■ More than 100,000 failing to switch to cheaper interest rate
THOUSANDS of mortgage holders are turning their backs on huge savings.
More than 100,000 homeowners are paying up to €3,000 more a year on their mortgages than they need to at two banks.
Customers of Bank of Ireland and Permanent TSB could move to better-value rates offered by their own banks and cut monthly payments by up to €300.
They are paying variable rates, for long the most expensive mortgage products, while both banks have lower rates they could move to, it has emerged. Both banks have written to customers, saying they are paying too much, and could make enormous savings by switching to a different rate.
The difference on a €300,000 mortgage between the 4.5pc variable rate and the fixed rates works out at €255 a month.
THOUSANDS of mortgage holders are turning their backs on huge savings.
More than 100,000 homeowners are paying up to €3,000 more a year on their mortgages than they need to at two banks.
Customers of Bank of Ireland and Permanent TSB could move to better-value rates offered by their own banks and cut their monthly payments by up to €300.
They are paying variable rates, for long the most expensive mortgage products, while both banks have lower rates they could move to, it has emerged.
Both banks have written to their customers warning them they are paying too much, and could make enormous savings by switching to a different rate.
Bank of Ireland chief executive Francesca McDonagh told the Oireachtas Finance Committee yesterday that close to 44,000 residential customers are on its standard variable rate. Almost 10,000 buy-to-let mortgage holders are on the same rate.
The bank’s variable rate for residential customers varies from 3.9pc to 4.5pc. But it has fixed rates for one, two, three and five years of 3pc.
The difference on a €300,000 mortgage between the 4.5pc variable rate and the fixed rates works out at €255 a month. Over a year this is €3,000.
Ms McDonagh said the bank has written to all its variable rate customers telling them they can take up the cheaper fixed rates, and an insert was put into these customers’ annual mortgage statements.
To get the lower rates some customers will have to provide an updated valuation, but other than that there is no requirement to engage a solicitor, pay fees or move the mortgage.
Fianna Fáil finance spokesman Michael McGrath said he was concerned customers were paying more than they need to, and blamed customer inertia.
Ms McDonagh agreed that too many customers were remaining on variable rates, but she did not feel inertia was the reason for this.
She said the bank had been communicating with customers and the message was slowly getting through, with a rise this year and last in the numbers switching rate within the bank.
Permanent TSB told the same committee last month that 57,000 of its customers on variable rates had failed to apply for a lower rate, known as the managed variable rate.
This rate is based on the value of the property relative to what is owed on the mortgage.
The managed variable rate is at least 0.2pc cheaper than the variable rate, and lower again for those who have a lot of equity built up in their home.
The bank pays for the valuation of the home that the rate is based on.
PTSB is due to announce a 0.5pc reduction in its two, three and four-year fixed rates for existing customers.
Meanwhile, indications from the European Central Bank are that interest rates could rise as soon as September next year.
It had been thought that any rise would be held off until December 2019.
Higher ECB rates would mean people on trackers and variable rates would pay more.
Those on fixed contracts would be unaffected.