Nab a better home loan deal before it’s too late
Don’t pay on the double – switch your mortgage now and save €7.5k a year!
Tens of thousands of euro in savings are up for grabs for savvy mortgage switchers. Brokers have revealed that borrowers can make substantial savings by grabbing incredibly low mortgage rates now before they start to rise. The gap between the dearest and cheapest loans is bigger than ever after widening even further in recent weeks. And this means that so too are the potential savings for switching.
‘Maximum savings right now are higher than ever,’ advises Mark Coan of Moneysherpa.ie
‘Due to the big gap between variable and fixed rates these are some of the biggest switching savings on record. A variable rate customer at 6.54% [which far from the highest rate] will save over €35,000 over 15 years.’
But the window to cash in may be closing fast. Rates as low 3.65% seem incredible considering the European Central Bank has hiked its rates – and by extension those on the wholesale money markets – by a total of 4.5% since July 2022! But that rate is still available to switchers if they act fast.
Meanwhile, unlucky borrowers can be paying as much as 7.6% – well over double that – because they picked the wrong type of lender to weather the interest rate crisis.
Don’t expect this gap to last for much longer. The main Irish banks have passed on only a fraction of ECB interest rate hikes – for now.
‘With ECB rates expected to stay high well into 2025, the average variable rate is expected to rise,’ warns Mr Coan.
Our table shows the best deals available for mortgages with 80% loan-to-value rates.
And Bank of Ireland plus AIB – and its offshoots Haven and EBS – dominate the top six. But if you can stretch your loan-to-value (LTV) rate to 60%, PTSB and Avant Money enter the picture.
‘The good news is that fixed rates are still available under 4%. One of the best deals on the market right now is Avant Money’s three-year fixed rate at 3.87% aprc [for 60% LTV],’ says Mr Coan.
Avant has similar deals across a wide range of fixed-rate loans for 60% LTV home loans.
‘An average tracker mortgage holder can expect to save over €23,000 over 15 years by switching to Avant Money.’
Even customers on the average variable rates of 4.39% can save more than €6,000 by switching to the same deals.
‘However with these rates likely to rise to over 6% in the next year, moving early to secure a low fixedrate deal now could be a wise choice,’ Mr Coan advises.
The discrepancy in mortgage deals exists because major banks such as AIB, Bank of Ireland – and their offshoots like Haven and EBS – have held off passing on painful hikes. (Avant Money is also backed by the financial clout of
Spain’s fifth biggest bank – Bankinter.) But don’t be too grateful to them for that.
The Irish banks can afford to do that by also skimping on rate rises for the €150bn worth of savings deposits in this country.
Smaller lenders such as ICS and Finance Ireland borrow money in the money markets, where rates have shot up. And there’s little they can do to ease borrowers’ pain.
Those lenders were once among the cheapest in the market for that very same reason and many brokers recommended them.
They were smallish, nimble lenders who could offer some of the incredibly low money market rates that used to be the norm. But now they are at the mercy of much higher money-market rates without the backing of their own deposits base.
On a €280,000 loan, someone with a 7.6% loan would have to pay €2,273 a month with Finance Ireland when they could be paying €1,646 with BoI or Haven, a massive monthly difference of €627 – or €7,500 a year!
Some people might not be able to switch… but most should be – and they would be well-advised to go