Mortgage switching activity increases sharply year on year

Mortgage switching activity increases sharply year on year

Posted on 21Apr

Ireland’s mortgage switching market is exploding and not ahead of time – this is according to, 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. 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. 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 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.

How to go about gifts to take stress out of mortgage deposit

Posted on 11Dec

How to go about gifts to take stress out of mortgage deposit

Know your rights when seeking help from parents to get on property ladder

Forget AIB, Bank of Ireland or any of the remaining stalwarts of Irish finance. It’s the Bank of Mum and Dad that is giving most first-time buyers a step on the property ladder.

According to data from the Banking and Payments Federation (BPFI), 42pc of new home purchasers used a parental gift toward their deposit. And they needed it: €52,500 is now required on average to get a first-home deposit together – a doubling from a decade ago. And despite a record 31,000 new builds commencing this year, it isn’t anywhere near enough, or fast enough, to curb house price inflation.

The total value of gifts alone was €210m in the first six months of the year, and that’s worrying enough for the Government to have at least considered taxing it in the budget. It is inequitable for one – not everyone has a wealthy parent to contribute – and of itself, it inflates house prices.

Ray McMahon, chief commercial officer at ICS Mortgages says: “This would reflect what we are seeing from our customers also. What is particularly of note from the BPFI figures is the significant number of second-time buyers who are also utilising gifts – a trend we are increasingly observing.”

There are conditions attached, but it’s normal for a lender to facilitate gifts as part of the deposit as long as it’s clear who’s giving it and under what circumstances, he says.

And when is a ‘gift’ a ‘loan’ or vice versa? If it is due to be repaid, it should have interest charged, with gift tax implications – this is what is being considered in the future by Government. But with ordinary interest rates at zero, it’s difficult to see how parents could charge kids interest on a loan they’re happy to hand out.

If it’s gifted, it matters by whom and for how much. Such things don’t bother loving parents, but they do concern Revenue officials and banks.

With house prices inflating by 12.4pc year-on-year and rents up by more than 7pc, what is a saver to do?

Interest rates are not only zero, but negative, given the effect of inflation – currently running close to 5pc. Yet try to do anything risky with the cash by way of eking out a return and the lender immediately frowns. Coupled with having to shell out more income toward rental while also saving, makes it very difficult.

 The Rules

First-time buyers need not just 10pc of the purchase price, but an additional 2pc or so to cover stamp duty and fees. They need to be able to show capacity to service the debt, plus 2pc added for ‘stress test’ purposes along with their mortgage protection and home insurance. Oh, and they need to buy clothes, pay bills, food, pay creche fees and the other sundries of modern life.

Joey Sheehan, author of The Mortgage Coach, says the purpose of the Central Bank’s macroprudential rules on lending (which were not changed in its latest review), “is to ensure buyers cannot borrow more than they can afford to repay”.

He recommends transferring savings into one dedicated account to save a regular amount each month. “Avoid making withdrawals. It’s better to save less on a monthly basis and then add extra when you can rather than over-saving and dipping into it”.

He adds a lender will grant Approval in Principle (which lasts six months, but is easily renewed), when they can see the required percentage of purchase available.


When it comes to gifts, there are strict rules, both legal and financial, in place. Firstly, a gift must be just that. Banks don’t like to see additional loans being set up, either from the Credit Union or Mum and Dad, which could reduce a borrower’s capacity to service the mortgage.

They will typically demand a ‘gift letter’ or in some cases a Deed of Gift, witnessed by a solicitor to show that the parent has no expectation of getting their money back and that no secondary claim is put on the property. If there is capital acquisitions tax due, they’ll want evidence it has or can be paid.

A parent can gift up to €335,000 to a child without gift tax being applied. However, this is a lifetime cumulative limit, from both parents, for all gifts, and inheritances and any future amount over this threshold will be taxed at 33pc.

A grandparent can gift up to €32,500, again with the same rules applying.
Separately, there is a Small Gifts Exemption permitted of €3,000 per person, per year, from anybody to anybody else.

If it is done cleverly and with aforethought, four parents (his and hers) could gift a couple this amount over the two months (December and January) amounting to €48,000 in total without a tax implication, according to Eoin McGee, author of How to Be Good With Money.

Help to Buy Scheme

Under the Government’s extremely generous tax refund scheme, a gift may not even be necessary, with Revenue refunding four years of tax, to a maximum of €30,000 toward a deposit for a first-time buyer.

Securing a mortgage

Aside from the deposit, there are a lot of things you can do to get yourself mortgage ready. Banks like consistency, stability and diligence. Looking like an attractive borrower can be achieved in a few steps.

Have a good credit record: Missed repayments, even for an insurance premium or small loan is a red alert for lenders. Get your credit history from the Central Credit Register before the bank does.

Keep your spending ‘clean’: We’re all ‘tapping’ our way through life more than ever, so it will be crystal clear to a bank what you’re spending your money on. They get suspicious if they see unexplained large withdrawals of cash, frivolous spending or money being used to servicing a gambling account, even if you’re winning. If you use an app like Revolut or a different account to buy crypto currency or you have a store card, they’ll also want to see that.

Having a constant overdraft not only costs a lot, but it smacks of financial indiscipline. Control your direct debits, cut back and get rid of it six months before you apply for your mortgage.

Your income must be able to service a mortgage if interest rates were to rise by 2pc. This is the ‘stress test’ and banks will apply it before agreeing to lend. Work it out and be prepared to prove it.

Control your ‘nets’: No more than 35pc of net income should go on debt servicing. Pay off existing loans (highest-interest bearing ones) before applying for a loan, even if it means saving for longer.


Irish Examiner: “Making Cents: The step-by-step guide to securing a mortgage”

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Posted on 25Jul

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Posted on 15Jul

The help-to-buy scheme should be extended “sooner rather than later” to help first-time buyers being priced out, a mortgage expert has said.

Joey Sheahan of was speaking as a report from EY and DKM showed nearly half of all counties in the Republic are now unaffordable for first time buyers on an average income.

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Kildare to see 4,000 homes get fast-track planning approval

Posted on 27May


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