19-05-2025
- Business
- Irish Independent
Average new mortgage drawdown soars 80pc in a decade, highlighting surge in property prices
The average amount borrowed to buy a home is now €341,000 – up by €151,000 in the last 10 years.
This is a rise of almost 80pc in the average new mortgage drawn down, the Irish Independent Mortgage Switching Index has shown.
The dramatic rise in mortgage values from €189,940 in 2015 to €341,078 in the first three months of this year, reflects a surge in property prices. It also means that any shift in interest rates is now having a dramatic financial impact on borrowers, chief executive Martina Hennessy said.
New figures from the latest Index show that even a small reduction in mortgage interest rates translates into substantial savings.
And for those on higher interest rates, the potential savings from switching can be game-changing, Ms Hennessy said.
The gap between the highest and lowest mortgage rates in the market now stands at 3.15 percentage points. For a borrower with an average mortgage of €341,078, this equates to a saving of €611 a month.
Over a year it works out at more than €7,338 by switching from the highest to the lowest rate.
Recent figures from the Central Statistics Office show that property prices rose for the 18th month in a row in February.
The median price of a dwelling purchased in the 12 months to February was €360,000.
Ms Hennessy said strong property price growth has improved loan-to-value (LTV) ratios for many existing homeowners.
This makes them eligible for 'green mortgage' rates, which Ms Hennessy said are now likely to be far better rates than when they originally drew down their loan.
Switching can save mortgage holders thousands of euro a year, but it is expensive and many people are put off due to the time and effort it takes.
Legal fees for switching are typically between €1,000 and €2,000 and there is Vat on this.
Valuation fees are usually around €150, plus Vat.
Ms Hennessy said seven lenders will now offer cash-back switcher packages to cover legal costs associated with switching.
Switching activity is up 77pc in the year to March.
Despite this rebound in switching, activity remains well below 2022 levels.
Ms Hennessy said this points to widespread inertia.
'Mortgage holders who remain loyal to their original lender – often one of the main pillar banks – could be missing out on tens of thousands of euro in savings by not exploring more competitive alternatives,' she said.
'There has been a lot of change in the mortgage market over the last 18 months, competitiveness has improved with two new lenders entering the market and significant rate cuts.'
The index also highlights a shift in borrower behaviour, with over 20pc of new mortgages last year drawn down on variable rates.
This is compared with under 10pc in 2022, reflecting greater confidence that rates will remain stable or fall further, Ms Hennessy said.
An average variable rate on the Irish market is 4.15pc, but they range from 3.75pc right up to 5.65pc.
'As a result of this shift, we have seen real product innovation this year, with the introduction of a new benchmarked variable product,' Ms Hennessy said.
'Avant Money's Flex Mortgage product is benchmarked to the 12-month Euribor rate and currently starts from 3.04pc, and offers a huge opportunity for mortgage holders who have a preference for a variable rate to switch and save.'
