More mortgage holders switch bank but total moving still tiny
Published 14/08/2015 | 02:30
There has been a rise in the amount of people switching their mortgage, but the numbers are still tiny despite the savings that can be made.
New figures from the banks show that 240 people switched their mortgage from one lender to another in the April to June period.
This is up from 108 in the same period last year, according to the Banking and Payments Federation.
Goodbody Stockbrokers noted that switching is now at the highest level in four years, but it still only represents approximately 4pc of total lending volumes.
Overall, there continues to be a rise in the numbers taking out mortgages.
But economists said they expected a fall-off in first-time buyers taking out mortgages later this year as Central Bank lending restrictions begin to bite.
The low level of switcher activity comes despite both Finance Minister Michael Noonan and Central Bank governor Patrick Honohan encouraging those paying high variable rates to take their mortgage business to a different bank.
Founder of the Askabout.com website Brendan Burgess said it was likely homeowners were waiting to see if variable rates will fall before making any moves to switch.
He said variable rates are still around 1.5pc too high in Ireland, even after the rate cuts.
Mr Burgess expects them to fall from a combination of pressure from Mr Noonan and some increase in competition. "So people are probably holding off switching waiting for rates to fall further.
"But if everyone holds off, then there will be less competitive pressure to reduce interest rates," he said.
He said people should not fix for the moment until interest rates fall below 3pc.
The banking figures show that the value of new mortgage loans drawn down in the second three months of this year was up by nearly a third on the same period last year.
A total of 6,250 mortgages with a combined value of €1.084bn were drawn down in the quarter.
That compares with a total of just over 4,800 mortgages drawn down in the same three month period of 2014 with a value of €820m.