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Published on: doddl News

Irish Independent doddl mortgages Switching Index Q3 2020

  • The gap between the highest and lowest mortgage interest rate largest since the index began in 2015. Savings of up to €135 per month for every €100,000 owed.

 

  • The Lowest Market Rate is 1.95% representing the lowest rate in 12 years. Ten Lenders now in the Irish mortgage market. Brokers offer the widest choice of mortgage offers including four mortgage lenders who rely on the broker market as their core distribution channel.

 

  • The numbers taking their mortgage via specialist Mortgage Broker at a 10 year high

The gap between the highest and lowest mortgage rates has stretched to a five-year record.

It comes after the launch of a mortgage rate of less than 2pc which has driven a surge in switching activity.

The new rate is the lowest in this market for 12 years.

The gap in rates means the difference in cost between the highest and lowest rate is costing more than €4,000 a year, a rise of €650.

Spanish-owned lender Avant Money is responsible for the difference widening between the best-value rate and the highest home-loan rate.

It is five years since there has been such a gap in the highest and lowest rates on the market, according to the Irish Independent Doddl Mortgage Switching Index.

The spread between the highest and lowest interest rates available on the market has now grown to 2.55pc.

This works out at a saving of €135 per month for every €100,000 owed on a 25-year mortgage.

The index is based on the average mortgage drawn down of almost €254,000 for new lending in both the first-time buyer and second-hand mover markets.

Managing director of Doddl.ie, Martina Hennessy, said: “The introduction by Avant Money of a sub-2pc mortgage interest rate means that rates are now the lowest they have been for over 12 years since the withdrawal of tracker mortgages in 2008.”

She said her brokerage has seen a 60pc surge in the volume of switcher applications since Avant entered the market as a challenger.

“The addition of Avant Money as a broker-only offering means there are four mortgage lenders in Ireland who rely on the broker market as their core distribution channel.”

The Avant interest rate goes from 1.95pc for those borrowing 60pc or less of the value of the home.

Ms Hennessy said: “We have also seen a large increase in mortgage holders whose loan to value is 60pc or less, and who were not previously active in the switching market.

“This cohort of mortgage holder has been awoken by the headline rate drop below 2pc.”

She said customers with a loan to value of less than 60pc are generally comfortable with their payments and within the last 15 years of their term.

But they realise how much they could save and potentially repay their mortgage much quicker.

Mortgage switching increased for the three months to the end of September by over 13pc in volume compared to the prior quarter, Doddl.ie said.

The Central Bank recently said that mortgage holders are leaving thousands of euro on the table by failing to switch home-loan provider.

Its research found three in five eligible mortgages could save more than €1,000 in the first year after switching to a cheaper lender.

These borrowers could save more than €10,000 over the remaining term of the loan.

Ms Hennessy said many mortgage holders are still unaware of the substantial savings that can be made by switching mortgage or where to start.

The Central Bank found many people perceive switching to be a complicated or costly process. But Ms Hennessy said using a broker takes much of the hassle out of the process.

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