Mortgage repayments are the largest monthly expense of most households in Ireland, so wouldn’t it be great if there was an easy way to lower that big monthly outgoing?
Well, in a recent piece of extensive research, the Central Bank of Ireland found that borrowers can save “significant sums of money” by switching their mortgage.
And today, the findings of a fresh report have been revealed, and they make for encouraging reading for anyone looking to knock a big chunk off their monthly mortgage repayments.
The key finding from the Central Bank’s mortgage switching report is that many consumers who switched mortgages had a “positive experience” in doing so.
In fact, 81% of those surveyed who have gone through the switching process report that they fully understood each and every step of the process.
However, it appears that many borrowers are sceptical about the switching process, with 44% of those surveyed saying that they haven’t switched because they think it would be too complex.
So, the challenge of increasing mortgage switching appears to be two-fold:
Consumers should be made more aware of the financial advantages of switching
The switching process itself should be simplified
The number of borrowers switching mortgage has been increasing, partly due to the substantial cashback incentives being offered by the banks at the moment.
AIB is currently offering €2,000 in cash to anyone who switches their mortgage to the bank.
KBC is offering the exact same, and Ulster Bank is offering €1,500.
Permanent TSB is offering 2% of the full mortgage amount in cash to switchers, and Bank of Ireland is offering 3% (but you must be a current account holder to take advantage of this offer).
To put Bank of Ireland’s switching incentive in context, let’s look at an example.
A borrower with €200,000 outstanding on their mortgage will get a €6,000 in cash from the bank for switching. And a borrower with €300,000 outstanding will get €9,000. The cash is paid in two chunks; the first 2% at the time of switching and the remaining 1% after five years.
Large incentives like this appear to be helping tackle challenge number one; that of making consumers aware of the financial advantages of switching.
And the Central Bank’s new report has outlined a number of ways in which challenge number two - making the switching process easier - can be tackled.
The Central Bank has found that more borrowers would consider switching mortgages if banks had dedicated switching teams, if it was made easier for them to compare mortgage products, if the process was less time-consuming and finally if they were given mort clarity around how long the process would take.
The Central Bank has announced that it intends to act upon these findings and has committed to publishing a consultation paper in the autumn to outline proposals on how to better help consumers who would like to switch.
Acting Deputy Governor of the Central Bank, Bernard Sheridan, outlined the intentions of helping to increase mortgage switching, saying; “The research shows that those borrowers who switched their mortgage had a positive experience. The Central Bank will progress its work in this area by publishing a consultation paper later this year which will set out proposed measures to help any consumer who is considering switching”.
At bonkers.ie, we help borrowers save significant sums of money by switching mortgages on a regular basis and are pleased to see that the Central Bank is firmly committed to helping more and more consumers reduce their monthly mortgage repayments.
Consumers can now easily compare rates and switch mortgages on bonkers.ie, step one is to see how much you could save by using our Mortgage Calculator.
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