Mortgage switching by homeowners at quarter of boom levels despite €10k saving potential
The number of homeowners switching their mortgages remains at a quarter of what it was at the peak of the boom, according to the Association of Irish Mortgage Advisors.
AIMA, the mortgage broker representative body, said the vast majority of the 150,000-200,000 mortgage holders on standard variable rates are overpaying by hundreds, if not thousands, of euro each year.
It said the latest report on mortgage drawdowns from the Banking & Payments Federation Ireland found that fewer than 5,887 (approximately 4% of all standard variable rate mortgage holders) switched in the last 12 months.
This compares with 25,937 mortgage holders who switched in 2007.
The representative body said it hopes 2020 will see a significant upturn in these numbers.
“The 2020 mortgage-switching figures should be at least double those of 2019 if there is to be any hope of driving down interest rates and ensuring all mortgage holders are getting the best value on the market,” said Trevor Grant, the chairman of AIMA.
“While recent figures show that the switching trend is growing ever popular, the numbers are still below what they should be.
“The volume of outstanding SVR mortgages at the end of September was 20,291 — this is a sizeable portion of our mortgage market.
“We believe that less than one in five of these households is on the best available rate and therefore the majority could save by switching.”
“In addition, if more people switched, the banks would be more likely to lower their rates to protect their market share — this is simple economics,” said Mr Grant.
The Central Bank analysed over half a million mortgages and found that up to 21% of borrowers could save money by switching.
Of those mortgages that could save money by switching, approximately 16,000 could save over €1,000 in the first 12 months, and around 27,000 switchers have the potential to save more than €10,000 over the lifetime of the mortgage.
