Ireland’s mortgage switching market is exploding and not ahead of time - this is according to MyMortgages.ie, the online mortgage brokers who are reporting a 39 percent increase in their own levels of switching activity between March 2021 and March 2022.
The mortgage experts say there are a few main drivers to the avalanche of people looking to switch – namely KBC and Ulster Bank leaving the market, a sharp increase in competition, and some awareness around possible oncoming rate rises from the ECB. MyMortgages.ie are reporting that in the last 12 months alone
ICS and Avant Money introduced interest rates at 1.95 percent for up to five years fixed
Finance Ireland and Avant introduced long term fixed rates up to 25 or 30-year fixed terms,
Haven Mortgages introduced a green rate of two percent fixed (all the way to 90 percent Loan to Value ) for four years with €2,000 cashback for switching
The mortgage experts say they expect the volume of switching activity to ramp up to an unprecedented level as the year progresses. MyMortgages.ie have set out four examples of average cases in which the mortgage holder in question was able to make big, but not uncommon, savings:
Case 1
Currently on a standard variable rate of 4.25 percent with KBC or Ulster. Loan amount owing is €200,000 and value is €400,000 = 50 percent Loan to Value. Term remaining 30 years.
New interest rate 1.95 percent meaning repayments reduce by €249 monthly or €3,988 annually or €89,530 over 30 years.
Case 2
Currently on standard variable rate of 4.25 percent with KBC or Ulster. Loan amount is €300,000 and value is €400,000 = 75 percent Loan to Value. Term remaining 30 years.
New interest rate 2.15 percent meaning repayments reduce by €343 monthly or €4,116 annually or €123,480 over 30 years.
Case 3
A customer that owes €300,000 on a variable rate of 4.25 percent with KBC or Ulster Bank, with 30 years remaining, would have monthly repayments of €1,475.
A 0.5 percent interest rate rise would increase this to €1,564, which is an annual increase of €1,068 or €32,040 over 30 years.
A one percent rise in the ECB’s benchmark rate would increase the monthly repayments to €1,656 which is an annual increase of €2,172 or €65,160 over 30 years.
Tracker Mortgages MyMortgages.ie have observed that, in recent months, they have seen a steady increase in tracker rate mortgage holders enquiring about long term fixed rates, fearing that future interest rate rises could wipe out the benefit of their low margin trackers.
Case 4
A borrower that has €300,000 outstanding on a tracker rate of one percent, with 20 years remaining, would have a monthly repayment of €1,379.
A 0.5 percent interest rate rise would increase this to €1,447 - which is an annual increase of €816, or €16,320 over 20 years.
A one percent rise in the ECB’s benchmark rate would increase the monthly repayments to €1,517, which is an annual increase of €1,656 or €33,120 over 20 years.
