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Homeowners paying average of €4,000 extra per year by not switching lender

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Martina Hennessy, managing director of doddl.ie. Photo: Conor McCabe Photography

Martina Hennessy, managing director of doddl.ie. Photo: Conor McCabe Photography

Martina Hennessy, managing director of doddl.ie. Photo: Conor McCabe Photography

Homeowners are paying an average of €4,000 extra in mortgage repayments a year by failing to switch lenders.

Householders have been urged to capitalise on potential savings when their annual mortgage statement arrives this month and resist simply filing it away.

Renewed competition in the home-loans market means the gap between the best-value mortgage rates and existing ones has widened, the latest Irish Independent doddl.ie mortgage switching index has found.

Doddl.ie managing director Martina Hennessy said large numbers of mortgage holders do not know what mortgage rate they are on. This means that thousands of homeowners are not aware how much they could save by switching provider.

She said mortgage statements are being issued this quarter by all the lenders.

This means it is the perfect time to see if you can get a better rate and take advantage of these considerable savings.

“Irish mortgage holders generally pay up and, for the most part, don’t question the interest rate they are charged.”

Ms Hennessy said the average new mortgage rate in Ireland at the end of last year was 2.79pc. But the lowest rate is currently 1.95pc.

“If your mortgage statement reflects a higher rate, you should check to see if you can save by switching,” she said.

The savings indicated by the index have grown by €735 in the past six months as the gap between the highest and lowest rates on the market widened to 2.55 percentage points.

This means a saving of €135 per month is possible for every €100,000 owed on a 25-year mortgage.

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There are still more than 200,000 households repaying their mortgage on standard variable rates of up 4.5pc.

This is at a time when the lowest available rate on the market is now a fixed 1.95pc.

The index is based on the average mortgage drawn down for new lending in both the first-time buyer and second-hand mover markets, which is currently €258,829.

And the gap in savings that can be made from switching has widened to a huge extent in prime property locations.

The average homeowner in a three-bed semi in Dublin city could potentially save €455 per month, or €5,460 per annum.

This is based on a 90pc loan-to-value mortgage and a rate of 2.3pc over 25 years on an average house price of €431,833, Doodl.ie calculated.

Despite the big savings that can be made by switching, the number of Irish households doing so remains low.

The latest Central Bank report on mortgage switching recorded that 61pc of eligible switchers could save over €10,000. Some 13pc stand to gain over €30,000 in present-value terms.

“Many homeowners don’t really think of their mortgage as something they can take control of,” said Ms Hennessy.


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