Financial fitness tops the list of new year’s resolutions for many people.
They resolve to tighten belts, pull up their fiscal socks, cut back on non-essential spending, shop around for better value on essentials, and put something by for the inevitable rainy day. No shocks there.
But what is surprising is just how few of us take time to look at how much we can save by switching our mortgage.
While switching mortgages can take time, it can result in significant savings on monthly repayments through lower interest rates offered by another lender or by availing of a different product from their current lender. Indeed, analysis by the Central Bank of Ireland shows that homeowners who switched mortgages between 2019 and 2022 saved an average of €2,000 per year.
Despite that, just 28 per cent of mortgage holders considered switching in the past year according to research carried out by Banking and Payments Federation Ireland (BPFI) in October 2024.
The research also found that only about one in three (34 per cent) have looked for information on mortgage rates available in the past six months, while only 27 per cent have researched mortgage products available in the market.
The findings also show that many customers do not have access to the information required to compare rates. Some 28 per cent of mortgage customers said they didn’t know the current loan-to-value (LTV) ratio on their mortgage and a further one in four (25 per cent) said they didn’t know their home’s building energy rating (Ber).
“Some customers may not be aware that since they first took out their mortgage, factors such as a decrease in the loan-to-value [LTV] ratio of their property or an improved Ber could impact the savings that can be made through switching,” says AIB managing director retail banking, Geraldine Casey.
“Many customers may not be aware they qualify for one of AIB’s cheaper green mortgage rates,” she adds.
“According to the Sustainable Energy Authority of Ireland, more than 35,000 home upgrades have been completed so far in 2024 and almost 48,000 retrofit grants were made in 2023. If you are among the growing numbers who have retrofitted your home since you drew down your original mortgage, you may also now qualify for a green mortgage rate.”
She points out that AIB offers some of the lowest mortgage rates on the market along with dedicated mortgage advisers who can help customers and demystify the process.
“As part of our commitment to sustainability and helping customers transition to a low carbon society, AIB announced two new shorter-term green fixed mortgage products in October 2024.”
The bank is offering an AIB Green 3 Year Fixed rate for homes with a Ber between A1 and A3 from as low as 3 per cent, and an AIB Green 2 Year Fixed rate for homes with a Ber between A1 and B3 from as low as 3.15 per cent. These are AIB’s lowest available mortgage rates.
In addition, in September 2024, the bank reduced its five-year green fixed mortgage rate by 0.25 per cent. This rate is available for homes with a Ber rating between A1 and B3. AIB’s four-year fixed mortgage rate for all customers borrowing €250,000 or more was reduced by the same amount. The five-year green rate is available from as low as 3.20 per cent while the four-year fixed rate starts at 3.70 per cent.
AIB also offers customers on a fixed rate the flexibility to overpay on their mortgage by up to €5,000 per year. Customers can pay more than their normal repayments with an extra monthly payment or a lump-sum payment, or both, generating considerable interest rate savings over the long term.
“The new year is a good time to review your personal finances and find out how you can make savings,” Casey says.
“At AIB, we are committed to choice, value and convenience for our mortgage customers. We have made it easier for customers to switch to us by offering a €3,000 switcher payment, we have reduced our Green Mortgage rates and expanded our product offering for new and existing customers. We also have a team of dedicated mortgage advisers in branches across the country who will support customers through the mortgage process.”
She concludes by noting that the BPFI has launched a nationwide information and awareness campaign which aims to encourage mortgage customers to look at their switching options, and outlines what to consider while shopping around as well as the steps involved in getting ‘switcher ready’.
Central to the campaign is the launch of a new online resource InYourInterest.ie, which provides a range of information for customers who want to learn more about mortgage switching.