Numbers switching mortgages jumps

THE number of homeowners switching their mortgage has jumped in the past year, new figures show.

Experts say increased competition among the banks means better deals are tempting borrowers to switch.

The number who switched in August was 555 up from 333 a year earlier – an increase of 66%.

Someone with a €250,000 mortgage paying 4.3% could save more than €250 a month, or €3,000 a year, by switching to the cheapest rate on the market, according to the Banking and Payments Federation (BPFI) figures.

David Hall, of the Irish Mortgage Holders’ Organisation, said the surge in homeowners switching and fixing their loans was because of increased competition amongst lenders. ‘What’s driving it is good fixed rates in the market and competition. People want to be sure what they’re going to pay and they are getting good fixed rates.

‘One guy in my office is applying for a fixed rate, he’s on 5% with Permanent TSB. He’s going to come down to 2.8% fixed for five years. It’s still high compared to Europe but still it’s very good and the point is there’s competition coming in around fixed rates.

He said: ‘ECB putting rates up is always a risk and a greater risk for those people who are under pressure and just about hanging in there. The problem is if rates go up by 1%, that’s the problem, it’ll blow them up. So keep on switching,’ he said.

Switching is the ‘main driver’ of growth in the mortgage business, said BPFI director Felix O’Regan.

‘The latest mortgage approval figures indicate continuing robust mortgage lending in overall terms. While the volume of approvals for both first-time buyers and mover purchasers show a small year-onyear decline, the value for both show a year-on-year increase; and this is likely reflecting house price increases.

‘At the same time, switching activity continues to be the main driver of growth, up 81.3% in value and 66.7% in volume year on year; and this is likely reflecting further competition in the marketplace,’ he said.

Spokesman at switching site bonkers.ie Daragh Cassidy said: ‘The continued increase in the level of switching is indicative of increased competition in the Irish market and the continued rise in property values, as previously those in negative or small amounts of equity would have few switching options.

‘And while the increase is encouraging, at less than 1%, it’s still far too small, particularly when you consider the potential savings involved.

‘Following a public consultation process, the Central Bank is introducing changes to its Consumer Protection Code to make it easier for mortgage customers to switch.

‘This goes live in January 2019 and should hopefully see the level of mortgage switching increase further,’ Mr Cassidy said.

‘Ulster Bank’s 2.3% fixed rate over two years and its 2.6% rate over four years are excellent value in an Irish context.

‘So it’s possible that these highly competitive rates have finally got Irish mortgage holders to seek out better value given the savings involved.’

He warned that while there are some upfront legal and valuation fees with switching mortgage, most banks will give either a fixed amount back or a percentage of the loan to cover the expenses.