Mortgage News Daily – Renewed competition in mortgage market sparks surge in homeowners switching providers
There has been a surge in homeowners switching mortgages to benefit from renewed competition in the market.
n extra 30pc of homeowners were approved to move their mortgage to a new provider between February and March of this year.
The average mortgage holder, who is not on a tracker, can save €12,000 over three years by switching, according to the latest edition of the Irish Independent Doddl.ie switching index.
It takes just six hours to get the documentation together and apply for a switch.
The rise in the number of new switcher approvals between February and March was driven by the announcement of Ulster Bank’s exit from this market.
Doddl.ie managing director Martina Hennessy said Irish mortgage holders generally paid up and did not question the interest rate they were charged.
“However, Ulster Bank’s announcement in February saw customers who ordinarily may not have considered switching taking control of their mortgage and, in doing so, saving themselves thousands,” she said.
Over the first three months of this year, the numbers switching their mortgage increased by over 15pc on the same period in 2020, with more people using time during the latest lockdown to switch and save.
This trend is expected to continue, with the announcement of new 15- and 20-year long-term rates by Finance Ireland, and Avant Money reducing a number of its fixed rates.
Ms Hennessy said the latest research carried out for the index showed that just six hours of work can save the average Irish homeowner more than €12,000 over three years.
Homeowners can be paying an average €4,000 in extra mortgage repayments per year by not switching lenders, according to the research.
The index is based on the average mortgage drawn down for new lending in both the first-time buyer and second-hand mover markets, currently €253,562.
The gap between the highest and lowest rates on the market has widened in the past year.
This means a saving of €135 per month for every €100,000 owed on a 25-year mortgage for those who switch.
It takes six to eight weeks to complete a mortgage switching transaction.
“A survey of the time inputted by our mortgage switchers showed an average of six hours was spent between research, compiling documentation, completing application forms and engaging professional valuation and legal services,” Ms Hennessy said.
The research and consideration phase takes one hour. The largest amount of time in the process is three hours for putting together the documentation for both the application and completion of the switch.
Providing entry to the valuer and meeting your solicitor to sign the new loan offer took on average two hours, she said.
In the past week, Finance Ireland has introduced 20-year mortgage rates.
Ms Hennessy said the offerings came with features that would see the rates reduce over time, based on loan to values.
And Avant Money has also introduced new four- and 10-year rates, which are the lowest in the market.
Many mortgage holders who were looking to top up for home improvements had chosen to shop around for better market rates, as opposed to just topping up with their existing mortgage lender, she said.