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RTÉ News
3 days ago
- Business
- RTÉ News
Lenders banking on customer apathy on mortgage rates
The latest Mortgage Switching Index suggests that thousands of mortgage holders on variable rates could be paying over 2.25 percentage points more than necessary. said that despite the return of sub-3% variable rates to the market, many borrowers remain on legacy variable products of up to 5.25%, adding that while fixed rates have decreased over the last 18 months, variable rates have remained "stubbornly" high. Recent Central Bank figures show that 14% of all mortgages are on variable rates, which equates to almost 100,000 homeowners. Today's survey - for the second quarter of 2025 - found that mortgage switchers can now save more than double the annual savings available just five years ago. The average mortgage drawdown now stands at €346,842, up over €112,000 since the second quarter of 2020 - on the back of rising property prices and increased borrowing levels. As mortgage amounts grow, so too does the impact of securing a lower rate with switchers saving an average of €7,505 per year, up from €3,349 five years ago. The Mortgage Switching Index is published every quarter and tracks the savings available to mortgage holders in Ireland through switching. It is based on the average mortgage drawn down in the quarter and the differential between the highest and lowest mortgage interest rates available. In June, the lowest rate on the market dropped below 3% to 2.98% for the first time since 2022. "Banks have large volumes of existing mortgage customers sitting on these high variable rates and to reduce them would mean large back book repricing which would be costly," Martina Hennessy, the CEO of said. She said that lenders are banking on customer apathy. "Unless more borrowers actively review and switch, there's no pressure to bring these uncompetitive rates down and we will struggle with pricing discipline in the Irish market," she stated. Martina Hennessy also said that the increase in savings for switchers is the direct result of larger mortgages but also significant interest rate spreads. "This is leading to a resurgence in mortgage switching. However there still remains a large cohort of homeowners sitting on uncompetitive rates," she said. "With rates falling, larger loans being drawn down, and new flexible switching options available, apathy can cost borrowers thousands," she added.
Irish Independent
3 days ago
- Business
- Irish Independent
Mortgage lenders ‘banking on people's apathy' as they charge sky-high interest rates
It is estimated that around 100,000 mortgage holders are paying way over the odds on their home loans. They are paying variable rates that are up to 2.25 percentage points more than necessary, according to the latest Irish Independent Mortgage Switching Index. Despite the return of sub-3pc variable rates to the market, many borrowers remain on legacy variable products. These are as high as 5.25pc. Fixed rates have decreased hugely over the last 18 months, but variable rates 'have remained stubbornly high', according to chief executive Martina Hennessy. She quoted Central Bank figures indicating that 14pc of all mortgages are on variable rates. This works out at almost 100,000 homeowners. 'Banks have large volumes of existing mortgage customers sitting on these high variable rates and to reduce them would mean large back book repricing, which would be costly,' Ms Hennessy said. 'Lenders are banking on customer apathy. Unless more borrowers actively review their rates and switch, there's no pressure to bring these uncompetitive rates down and we will struggle with pricing discipline in the Irish market.' The Mortgage Switching Index for the second quarter of the year found that borrowers can now save more than double the annual savings available just five years ago. The average mortgage drawdown now stands at €346,842, up over €112,000 since the second quarter of 2020. This trend is being driven by rising property prices and increased borrowing levels. Higher mortgage amounts also mean there is a greater impact from securing a lower rate with a mortgage switcher. ADVERTISEMENT Learn more Ms Hennessy said people switching from variable rates can save an average of €7,505 per year, up from €3,349 five years ago. The Irish Independent Mortgage Switching Index is published quarterly and tracks the savings available to mortgage holders in Ireland through switching. It is based on the average mortgage drawn down in the quarter and the differential between the highest and lowest mortgage interest rates available. This is leading to a resurgence in mortgage switching In June, the lowest rate on the market dropped below 3pc, at 2.98pc. This is the first time rates were this low since 2022. 'The increase in savings for switchers is the direct result of larger mortgages, but also significant interest rate spreads,' Ms Hennessy said. 'This is leading to a resurgence in mortgage switching. However, there still remains a large cohort of homeowners sitting on uncompetitive rates. 'With rates falling, larger loans being drawn down, and new flexible switching options available, apathy can cost borrowers thousands.' Recent figures from the Banking and Payments Federation Ireland show switching activity up 67pc in volume and 91pc in value year-on-year. The average value of switcher mortgages has increased to nearly €282,000, up from €235,000 five years ago. Top-up mortgages have increased by 25pc, with homeowners choosing to stay put due to a shortage of homes.
RTÉ News
19-05-2025
- Business
- RTÉ News
Switching could save mortgage holders €7,300
New figures show that the average new mortgage drawn down has surged by 82% over the past decade. The latest Mortgage Switching Index shows that mortgage drawdowns have soared from €189,940 in 2015 to €341,078 in the first three months of this year. said the jump reflects an equivalent increase in the country's escalating property prices and it also means that any shift in interest rates is now having a dramatic financial impact on borrowers. The online broker noted that for switchers, the gap between the market's highest and lowest rates now exceeds €7,300 and the gap between the highest and lowest mortgage rates in the market now stands at 3.15%. For a borrower with the average mortgage of €341,078, this equates to a saving of €611 per month - or over €7,338 per year by switching from the highest to the lowest rate. also noted that despite a rebound in switching, which was up 77% year on year in March, activity remains well below 2022 levels. Martina Hennessy, the CEO of said that 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. "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," she said. Today's index also highlights a shift in borrower behaviour, with over 20% of new mortgages in 2024 drawn down on variable rates, compared to under 10% in 2022, which the online broker said reflected greater confidence that rates will remain stable or fall further. An average variable rate on the Irish market is 4.15%, but they range from 3.75% up to 5.65% "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 3.04%, and offers a huge opportunity for mortgage holders who have a preference for a variable rate to switch and save," she noted. She said that Finance Ireland recently announced that they are stopping new mortgage lending, meaning many of its existing customers are now rolling off low fixed rates onto some of the highest rates in the market. "Mortgage holders rolling out of fixed rates with Finance Ireland certainly need to assess market options. With no new mortgage lending proposition in place and servicing transferred to a third party, there is little incentive for rate competitiveness," Ms Hennessy cautioned. She also noted that Bank of Ireland and AIB are focused on the green mortgage space with their most favourable rates offered to those with A energy ratings. But Martina Hennessy said that the majority of homes in Ireland do not meet the BER threshold to avail of lower green rates. She also said that the market has become more competitive for those who are not eligible for a green rate but who have built up equity in their home and they can still secure the lowest market rate, which is currently 3%. Ms Hennessy said that with nearly 700,000 home mortgage in Ireland and large numbers still on uncompetitive rates, the opportunity for mortgage holders to save by switching remains substantial.
Irish Independent
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.'
