‘Switch now if your mortgage rate is set to expire’

MORTGAGE-holders on either variable or fixed rates with less than two years to run need to act now to avoid challenging repayment hikes, experts have warned.

They say people rolling out of historic low fixed-term contracts in the next few years will face immediate rate increases of more than 1%.

Homeowners are paying an average €4,595 in extra mortgage repayments per year by not switching lenders, the quarter two Doddl.ie mortgage switching index found. This is almost €500 more than 12 months ago, it said.

The index is based on the average mortgage drawn down for new lending in both the first-time buyer and second-hand mover markets, currently €284,903.

Mortgage switching activity has surged, with approval volumes increasing year on year by 153%. Martina Hennessy, managing director of Doddl.ie, said: ‘We are in for a period of sustained rate increases and the pillar banks, who have some of the highest rates on the market, will soon implement rate increases. The vast majority of mortgage-holders will not have felt any affects from recent rises as they are with AIB, Bank of Ireland or Permanent TSB, who have not moved their rates.

‘If you are on a variable rate, unless you plan to pay it off in the immediate shortterm, you need to act now and fix your rate to avoid imminent rate increases.

‘Even a phone call to your bank will save you 1% immediately, and several percentage points a year down the road.’

She said the only people whose rises won’t immediately hit are those on medium-term fixed rates, remarking: ‘People with one year left to go face coming off an historic low rate and affordability may become an issue in light of overall cost-ofliving increases being experienced. Our advice would be don’t wait until next year – now is the time to revisit your mortgage to lock in your next fixed rate rather than waiting for your rate to expire.’