It’s a no-brainer but customers are still slow to switch
Regular Money readers will know that shopping around can save us thousands, especially when it comes to mortgages, energy, and health cover. But how many people do it? If not why not? And what can we do to up our game? Here’s a guide to what’s going on in three key areas according to new reports:
1. MORTGAGES
Switching mortgages gives you the biggest bang for your switching buck. You can save many tens of thousands of euro over the lifetime of your loan.
That’s multiple times more than even the hefty savings for switching anything else, as we highlight this week (see above).
Yet, the number of mortgage switchers has risen by only 0.5% – while the value of transactions has fallen nearly 11% in the latest bulletin from the Irish Banking and Payments Federation.
Mark Coan of Moneysherpa.ie said many borrowers are holding off on switching because they (wrongly) think interest rates are going to fall ‘significantly’ in the near future. It’s true that the main European Central Bank (ECB) rates are expected to fall… but our mortgages aren’t necessarily going to follow suit. The main lenders spared borrowers the brunt of ECB interest rate hikes on the way up (paid for by short-changing their savers) and are unlikely to pass on all the cuts on the way down.
‘Many are erroneously expecting interest rates to fall significantly in the near future. Switching has largely dried up as potential higher value switchers keep their powder dry,’ Mr Coan said. ‘The remaining switching volume is currently being driven by lower value amounts as mortgage holders with lower balances look to top up or update their circumstances.’
He advises borrowers to keep shopping around for value.
2. HEALTH INSURANCE
More than seven out of 10 health insurance customers have never moved provider. That’s a shocking statistic as health cover costs rise to new heights.
All adults have seen prices go up by 17% with average premiums now close to €1,600 per person, a new report from the Health Insurance Authority revealed this week. This means health insurance for a family of four could cost twice as much as even rampant energy bills. Here are three ways to get the best deal:
◼️ Ask your insurer – you can get excellent advice if you phrase the question correctly. Just ask
them to tell you about plans that offer similar cover to the one you’re on… but for less money.
◼️ Use the Health Insurance Authority’s excellent comparison tool (see hia.ie).
◼️ Hire an expert to do it for you for a fee of around €150 (with Totalhealthcover.ie for example) but bear in mind that charges may vary.
Always ask how your adviser is remunerated and how many providers that he or she is qualified to assess. Some may be tied agents of one insurer – or they might be paid on commission by one or two.
3. ENERGY
Switching activity in the energy market is improving, with 16% of electricity and 17% of gas customers moving provider, according to the latest figures.
Another 21% renegotiated their energy contracts (presumably after getting a better deal), according to the Commission for Regulation of Utilities (CRU). So what does that tell us? Firstly, that switching is catching on – albeit slowly. Secondly, more people are inclined to accept what their provider offers when they threaten to switch rather than actually leaving. That’s a bit of a cop out as suppliers will often – though not always – offer inbetween deals that are cheaper than what you are paying but not as good as what you could get elsewhere. So think carefully about whether you accept their offer. You can compare deals on Bonkers.ie or Switcher.ie and, if you find a better deal, tell your current supplier to see what they have to offer. Alternatively, use OneBigSwitch.ie to get group discounts or WeSwitchYou.ie can organise your switch for a small fee. And if you’re not comfortable online, ask a relative to do it for you.