Mortgage Switching – Recent rate decreases mean record savings for smart switchers

May 16, 2024

Mortgage Interest rates – what’s new?

The highest rate in the Irish market is now double the lowest with rates ranging from 3.45% to over 7% resulting in huge savings for smart mortgage holders who switch.

The Q1 Irish Independent mortgage switching Index has found that householders may be paying a record average of up to €7,812 in extra repayments per year by not switching lenders.

This compares to €3,587 twelve months ago as latest rate decreases by some lenders filter down through the pillar banks widening the gap between lenders and non-bank lenders.

The Index is based on the average new mortgage drawn down in the last quarter of €309,502 and a highest roll out variable rate of 7.15pc versus the lowest standard rate on the market – currently 3.6pc.

This has resulted in a record 42pc gap between 25-year monthly repayments of €1,566 on the lowest rate and some householders on €2,217 at the highest end of the scale.

Those who are eligible for Green rates can save an additional €300 per annum with the lowest Green rate on the market now starting from 3.45pc with a potential saving per the index of €8,113 per annum.

Latest figures show a significant drop in switcher activity in Q1 2024 down by over 50pc from Q1 2023.

The expectation that disinflation would lead to rate decreases meant that many mortgage holders chose to hold on variable rates in Q1 until rates dropped.

In the last six weeks we have seen rate decreases from six lenders as the impact of reduced funding costs starts to positively impact pricing.

Non-bank lenders ICS, Finance Ireland and MoCo have not yet reduced rates, these lenders are reliant on markets for funding, as funding costs decrease we should see these lenders also pass on reduced costs of funding.

Where to next for interest rates?

A big question for those rolling off fixed rates right now is will rates drop further.

The latest rate cuts have brought some competition to the market, the main pillar banks have focused on the Green mortgage space with rates for higher energy ratings starting from 3.45pc.

Avant Money who do not differentiate on building energy rating recently dropped rates by up to  0.45pc with rates now starting from 3.6pc.

No-one wants to pay more than they need to on their mortgage and so the question of further rate decreases is a very relevant one.

Tracker mortgage holders whose rate is directly linked to the ECB refi rate can be very hopeful of cuts to their mortgage rate this year with market analyst noting that we could see rate decreases from next month.

For the vast majority of Irish mortgage holders who do not have tracker rates, their rate will be determined by the funding mix and pricing policy of the Irish lenders and not directly by the ECB.

Most mortgage holders do not want to speculate when it comes to their mortgage, they like to lock in certainty.

Recent rate decreases have brought with them competitive rates sub 3.5pc. While these rates are not at the sub 2pc level of 2022 it would take extraordinary economic circumstances for rates to fall back to levels of 2016-2022.

For those holding out for their current lender to drop rates I would suggest that they review the market for the best rate they can achieve now.

Don’t just accept the rate your current lender has to offer, if it makes sense to switch then act now.

Switcher packages, reduced document requirements and recent rate reductions should see smart mortgage holders seeking out lower rates to reduce, what for most, is their largest financial commitment.

If you would like to review your rate and dont know where to start then contact our team – we would be delighted to help – Switchers start Here 

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