Continued rise in house prices good news for those looking to switch mortgage
Daragh Cassidy
Head Writer

Latest data from the Central Bank show a continued slowdown in house price growth. Prices nationally rose by 6.5% in 2018 compared to 12.1% the year before. However prices have now risen a whopping 83% since their low point in 2013. And while this is undoubtedly bad news for those looking to get on the property ladder for the first time, it’s good news for those looking to switch mortgage.

At we always say that switching saves. And switching your mortgage can really save!

At the moment someone who’s paying a 4.3% rate, has a €250,000 mortgage remaining and has at least 20% equity in their home, could save over €250 a month by switching to the cheapest rate on the market. That’s over €3,000 tax-free a year.   

However until recently many households would have been in negative equity or had only a small amount of equity in their homes and therefore been unable to switch. This is because most lenders like to see that you have at least 10% equity before they’ll consider your application.   

Recent house price growth

However the recent rapid rise in house prices has lifted tens of thousands of households out of negative equity over the past few years, meaning the option of switching is open to far more people than it was just a few years ago.

And the more equity you have in your home the more you can save! This is because lenders usually save their cheapest rates for those with the most amount of equity in the homes or the lowest loan-to-value ratio.

Loan-to-value ratio

Interest rates are usually offered in bands based on your loan-to-value (LTV) ratio or the amount you owe as a percentage of the price of your property. And the lower your LTV, the lower the interest rate you’ll be offered.  

Say you have a remaining mortgage of €250,000 and your house is worth €277,000, your LTV would be 90%. However if your house was now worth €333,000, your LTV would be only 75%.

If you switch to AIB you’d be offered a variable rate of 3.15% with a 90% LTV. But switch with a 75% LTV and you’ll be offered a much better 2.95%.

Similarly, if you want a fixed rate, KBC will give you 2.80% over five years with a 90% LTV, but a much better 2.65% rate if you have an LTV of 75%.

Get switching

The Central Bank recently introduced changes to its Consumer Protection Code to make the mortgage switching process easier. This coincided with the recent rise in house prices means there’s never been a better time to switch your mortgage.

If you are looking to switch, you can compare rates quickly and easily across all the different lenders on right now.