Mortgage switching activity is growing again as customers try to take advantage of falling European Central Bank rates, according to online broker Doddl.ie.
The volume mortgage customers switching lender spiked in 2022, just as the European Central Bank was poised to start raising interest rates.
However, as ECB rates rose – and good fixed rate deals disappeared – that activity plummeted.
However Doddle’s latest Mortgage Switching Index has identified a 45% rise in switching activity in 2024.
Figures from Banking and Payments Federation Ireland show that, in the last quarter of the year, €331m was drawn down by switchers – compared to €228m in the same period of 2023.
Switching activity was also 14% higher than in the third quarter.
“Rates have decreased but not across all lenders, so there’s a huge gap between the highest and the lowest rates in the market,” said Martina Hennessy, CEO of Doddl.ie. “This creates a vacuum in the middle where many mortgage holders can save by switching.”
The broker says that the gap between the highest and lowest rates on the market now represents a €7,000 a year difference for customers – meaning some could make significant savings by switching.
At the same time rising property prices – and the investments some have made in making their homes more energy efficient – may unlock better loan offers from banks.
Meanwhile the rates market here has gotten more competitive in recent months, particularly because of the arrival of two new entrants to the Irish mortgage market.
“Quite recently both MoCo and Núa have reduced their rates,” she said. “So as these brokers become more competitive on pricing, they’ve got really innovative products and by far the strongest digital mortgage origination on the market, so they are offering much-needed choice to Irish consumers.
“Once their pricing starts to really become a force they’ll definitely become more competitive in the market and really put it up to the incumbents.”
The switching process has also been streamlined, she said, meaning customers are able to make the move far easier than was possible just a few years ago.
However with ECB rates expected to fall further this year, some may be waiting before they lock in a fresh fixed rate with any lender.
Ms Hennessy says that in many cases banks have already priced future rate cuts in, meaning their current offers may not change dramatically regardless of the ECB’s next move.
“Lenders at the top of the scale may drop their rates, but lenders who are currently at or close to 3% may have very little room to cut further,” she said. “It’s probably more competitive forces rather than pricing that will drive competition in the market now.
“If you’re hoping that rates will continue to drop in unison with the ECB rate drops over the next few months, that’s unlikely to happen to the same extent.”
Article Source – Mortgage switching activity picks up again as rates fall – RTE