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Record number of homeowners saving money by switching their mortgages

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Mortgage switching has hit an all-time high as homeowners seek to cut thousands of euro from their annual payments.

They are seeking to benefit from enhanced competition in the home-loans market.

New figures show the number of approvals for mortgage switchers increased by over 36pc annually to the end of September.

This represents the highest annualised level of switcher approvals on record, according to the Irish Independent Doddl.ie mortgage switching index.

Homeowners are unlocking opportunities for huge savings due to mortgage rates now being available for under 2pc from non-bank lenders that are undercutting the main banks.

House prices are rising at an average of €3,500 per month – or more than 12pc annually.

Doddl.ie managing director Martina Hennessy said many homeowners are now gaining access to rates which are offered on a tiered basis, tied to their loan-to-value ratios.

She said lenders such as Avant Money and ICS Mortgages are currently offering fixed rates of 1.95pc if applicants have a loan to value of less than 60pc.

Homeowners can be needlessly paying an average €4,258 in extra mortgage repayments per year by not switching lenders, the index found. This is an increase of €735 over the past 12 months.

Switching can mean monthly savings of up to €135 for every €100,000 owed on a 25-year mortgage for those who switch. The index is based on the average mortgage drawn down for new lending in both the first-time buyer and second-hand mover markets in the third quarter, which is currently €263,984.

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“Consumers are becoming more aware of the recent downward shift in mortgage interest rates and are looking to capitalise on the strong loan to values in the current market,” said Ms Hennessy.

She said homeowners were rolling off fixed rates on to variable rates of over 4pc. But these people can now avail of these vastly lower rates.

“The really positive news is that the number of approvals for mortgage switchers increased by over 36pc year on year to the end of September, representing the highest annualised level of switcher approvals on record.”

Ms Hennessy said that over the last 12 months there has been a lot of downward movement in rates.

“There is still time to complete your mortgage switch in 2021 and start the new year in a stronger financial position,” she said.

Meanwhile, figures for those topping up their existing mortgage has also increased dramatically with over 37pc year-on-year increase in top-up mortgages drawn down to the end of September.

Research published by the Banking and Payments Federation Ireland showed that half of consumers are planning to undertake energy efficient home improvements in the next three years .

Just over half say they plan to use savings, with a further 28pc saying they will use a loan from a financial services provider and 22pc expecting to use government grants.


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