Q2 doddl.ie Mortgage Switching Index

August 01, 2023

Front page news for our Q2 Irish Independent doddl.ie mortgage switching Index, here’s what we have to say:

How much can you save by switching mortgage?

Homeowners may be needlessly paying a record average of €6,100 in extra mortgage repayments per year by not switching lenders, the Q2 Irish Independent doddl.ie mortgage switching index has found.

As average rates are predicted to rise above 5pc in the next six months, mortgage holders coming to the end of their fixed rates are being urged to act now to secure value deals at below 4pc or face shock repayment rises overnight.

Lowest Green rate mortgages Ireland?

And Ireland’s accidental Green army of home improvers could be missing out on even higher savings because they do not realise they are eligible for lower mortgage rates, the index has revealed.

The Index is based on the average new mortgage drawn down in the last quarter of almost €303,306 and a roll out variable rate of 6.65pc versus the lowest non-green 90% loan to value rate on the market – currently 3.8pc.

The gap between the highest and lowest rate on the market is now 2.85pc – representing the highest potential savings that the index has recorded of €508.81 per month, compared to €298.97 at the end of Q1.

And there are even cheaper rates available for those eligible for Green rates or who have lower loan to values.

Am I eligible for a Green rate mortgage?

Thousands of mortgage holders are unaware that they are eligible for Green mortgage rates after carrying out home improvements which earned their homes a B3 rating or above, according to Martina Hennessy, Managing Director of doddl.ie.

“Homeowners are increasingly now seeking loans to reduce the energy costs of their home becoming eligible for Green rates which are some of the lowest on the market at 3.65pc currently,” said Ms Hennessy.

“As an example, AIB’s five year fixed Green rate is 3.75pc, whereas their standard rate is 4.8pc, which would represent a saving of €8,820 in interest in five years on a €250,000 mortgage.”

Latest BPFI figures show numbers taking top ups to their mortgages has increased by 38pc year on year with homeowners topping up their mortgage for home improvements and seeking to consolidate existing debt.

Those on tracker mortgages have seen incremental increases in their mortgage repayments over the last 12 months, which already prompted many to relinquish their tracker and secure their repayments with a fixed rate product.

Over 90pc of new mortgages are on fixed rates, the vast majority with durations of five years or less, leaving them highly exposed to extreme repayment increases.

Rolling off a fixed rate in the next 12 months – Act now to plan well in advance

Around 50,000 of the 285,000 borrowers on fixed rates are due to roll off these in the next three years and will be hit by high rises overnight.

This will mean immediate repayment increases of €3,360 per year for those on a €250,000 mortgage.

Ms Hennessy has urged mortgage holders not to take a wait and see approach as rates continue to rise.

“Your mortgage is your biggest outgoing, and if you switch, you will save. This is true in both rising and falling rates environments if you get market-based advice to ensure you find it,” she said.

“All rates are going to be over 5pc in the next six months, but there is still an opportunity for people to lock into a value rate if they act quickly.

“In many cases it could make sense to exit early rather than to hold out to expiry of your fixed rate as there is no indication that interest rates have hit their peak.

“For those who are taking a wait and see approach I would suggest that this may be a costly strategy.

“Fixed rate holders will be emerging into a new normal and it is hugely important that they actively manage what for many is their largest financial commitment. Get advice, don’t just accept the first rate offered to you.”

The pillar banks, who have the lions’ share of the market, previously lagged behind in increasing rates but there have been two rises from AIB and BOI in July alone.

AIB’s very popular 5 year fixed rate is now 4.85% whereas 12 months ago it was 2.55% – meaning a difference of €312 per month or €3,744 per annum to someone on a €250,000 mortgage with 25 years remaining.

See links to front page feature in the Irish Independent ->

How green home upgrades can help save thousands on mortgage costs | Independent.ie

See link to feature in the Irish Times -> Potential mortgage saving of €6,000 per year by switching, data suggests – The Irish Times

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