Experts at MyMortgages.ie have reported a flurry of activity in the mortgage switcher market since the beginning of the year. The brokers forecast the switcher market alone will experience double digit growth in the first 6 months of the year, as an increasing number of mortgage holders learn of the option which could potentially save them anywhere in he region of €311 per month and €112k over the lifetime(1) of an average €350k mortgage.
Joey Sheahan, head of Credit at MyMortgages.ie, believes a number of factors have led to the influx in enquires they have experience in the last two weeks.
“We have experienced a three-fold increase in the volume of enquiries received since January 2nd from mortgage holders all over the country wondering if they might be eligible to switch lender and avail of cheaper rates. We put this down to a number of factors.
“As a results of recent media reports, anecdotal evidence suggests that an increasing number of mortgage holders seem to now be aware of the fact that switching lenders to avail of a better rate might be viable option for them.”
“Towards the end of year myself and others in the industry endeavoured to highlight the fact that more mortgage holders can and should switch lender to reduce their monthly payments. It was also revealed that changes in the way lenders operate have meant that many only charge a very small, if any, break out fee from fixed rate mortgage, so what was once a significant monetary hurdle to switching is now obsolete in many cases.
“1,319 people switched or re-mortgaged in the first half of 2017 and we expect this number to grow to at least 1,500 but could go as high as 2,000 during the first six months of 2018.”
Experts at MyMortgages.ie predict that recent proposals put forward by Fianna Fail to ban bank incentives to switch will lead to even greater level of activity as people try to “get in” before such legislation is introduced.
Sheahan went on to say: “Currently the mainstream lenders are offering sizable cash incentives to certain cohorts of the mortgage market top encourage them to move lender.
“The merits of his are up for debate but Fianna fail are putting forward a proposal to ban these cashback offers. If accepted, he Bill could come into force by he Summer, so we are going to see large swathes of people who might have, up until now, been on the “switching fence” make moves to avail of these offers before they are taken off the table.”
MyMortgages.ie have set out a sample case which saw mortgage holders save considerable sums by moving lender and reducing their rate.
Sample one: A couple with €390,000 (LTV <80%) outstanding over 28 years at a variable rate of 4% switched to a four year fixed rate of 2.6% which lowered their monthly repayments by €300 and saved interest of €99,000 over the remaining term.
“If this couple were to keep their monthly repayments at the same level as the higher interest rate, they could reduce the term of their mortgage by almost six years. We are seeing a lot of borrowers look at this option or a hydrid of reducing the monthly repayments together with the term reduction,” concluded Joey.
Source: Evening Echo 19/01/2018
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