Mortgage switching market ‘exploding’ with 39% increase in March

Ireland's mortgage switching market is "exploding", according to broker MyMortgages.ie, which is reporting a year-on-year increase of 39 per cent in its own levels of activity in March.

It said the main drivers to the “avalanche of people looking to switch” include the exits of KBC and Ulster Bank from the market, as well as “a sharp increase in competition”, and some awareness around possible upcoming rate rises from the European Central Bank.

In the last 12 months alone, it said, ICS and Avant Money introduced interest rates at 1.95 per cent for up to five years fixed, while Finance Ireland and Avant introduced long-term fixed rates up to 25- or 30-year fixed terms.

Elsewhere, Haven Mortgages introduced a green rate of 2 per cent fixed, all the way to 90 per cent loan to value, for four years with €2,000 cashback for switching.

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MyMortgages.ie said it expected the volume of switching activity to ramp up to “an unprecedented level” as the year progressed. Joey Sheahan, head of credit at the group, said the estimates tallied with official figures.

“Having just reviewed activity in our own client base, we see that our figures tally with recent statistics from the most recent data from the BPFI which shows that switching is currently the fastest growing segment, the volume of which jumped by 42 per cent in the 12 months to February 2022,” he said.

“No one knows when the ECB will increase their rates but the general consensus is that rises are on the horizon – we might well see two or three between this year and next.

“Although we always advise consumers to review their mortgage every three years or so, mortgage holders are more in tune with their finances than ever before.

“This is perhaps a positive consequence of the pandemic in that people have had more time to look at their financial position, whether it be through necessity or desire.”

Mr Sheahan said Ireland is lagging behind its European neighbours in terms of mortgage rates. “European interest rates are at an all-time low, but Irish mortgage rates, while competitive in this market, are still significantly ahead,” he said.

“In terms of value, Ireland’s mortgage providers are competing more on fixed rates – with longer terms and lower pricing.

“Whether to switch or fix is a perennial conundrum for mortgage holders and because no one has a crystal ball to tell what will happen with rates, there’s no one right answer. You must look at your personal situation and payment preference.

“If you decide to fix, you must then decide whether to go long term or short term. This again is down to each individual mortgage holder.

“If somebody has bought their forever home, they might be more inclined to take a longer fixed term, which can be up to 30 years, whereas if a borrower thinks they may be moving in the coming years they might take a shorter fixed term such as three years.

“The lowest fixed rate available is a three-year fixed of 1.95 per cent with Avant money and ICS based on a loan to value of below 60 per cent.”