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Mortgage holders paying up to €7,292 in extra charges per year by not switching

Online broker doddl.ie has urged mortgage holders to shop around for better rates

Mortgage expert Martina Hennessy, managing director of doddl.ie, said that the perceived barriers to switching have reduced, with five lenders in the Irish market now offering incentive packages and reduced documentation requirements for switchers. Photograph: Conor McCabe.

Ellen O’Regan
Mon Feb 19 2024 - 15:56

The difference between the lowest and highest mortgage rates on the Irish market has hit a record 3.3 per cent, as homeowners may be paying an average of up to €7,292 in extra repayments per year by not switching lenders.

The latest mortgage switching index from online mortgage broker doddl.ie is based on the average new mortgage draw down of €308,814 in the last quarter of 2023, with roll out variable rates on the market ranging from 3.85 per cent to 7.15 per cent.

The broker said this has resulted in a record 38 per cent gap between 25-year monthly repayments of €1,604 on the lowest rate, and some householders on €2,212 at the highest end of the scale.

It found that an average of €7,292 in extra annual repayments last quarter compares to €3,587 nine months ago, as rising funding costs filter down through the pillar banks and nonbank lenders.

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Just one per cent of Irish residential home loan mortgages switched in 2023, and in the last quarter eight per cent of all mortgage drawdowns were related to switching, compared to a UK average of 36 per cent.

Martina Hennessy, managing director of doddl.ie said that the perceived barriers to switching have reduced, with five lenders in the Irish market now offering incentive packages and reduced documentation requirements for switchers.

“There are now five mortgage lenders in the Irish market who pay cashback to mortgage switchers of up to two per cent of the mortgage at time of switching – including new entrant MoCo,” she said.

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According to doddl.ie, the market is pricing in rate cuts of up to 1.5 per cent by the European Central Bank (ECB) in 2024, and while tracker mortgage holders could see these in the coming months, fixed and variable mortgage holders might find that Irish banks hold their rates tight.

Ms Hennessy said that as State shareholding in pillar banks has reduced, so has the effect of political pressure on “keeping rates somewhat in check”, adding that it is now “up to consumers to actively switch if their current lender is uncompetitive”.

“Mortgage holders need to question their lenders with the attitude that if you don’t offer me a better rate, then there are better options that [they] can look at. It is now more important than ever that existing mortgage holders review their mortgage rate not just accept the first rate offered to them at the end of a fixed period,” she said.

Ellen O'Regan

Ellen O’Regan

Ellen O’Regan is an Irish Times journalist.

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