Steady competition is improving situation for mortgage holders - Brokers Ireland

Rachel McGovern, Director of Financial Services at Brokers Ireland

Rachel McGovern, Director of Financial Services at Brokers Ireland

Commenting on the most recent Central Bank Retail Interest Rates for July 2021, Brokers Ireland said while Ireland is back at the top of the euro area league with Irish mortgage holders paying 1.45pc over and above the euro area average, there has been a continuing marginal improvement in the rate, reflecting more competition in the Irish market.

Rachel McGovern, Director of Financial Services at Brokers Ireland said the 29pc increase in the volume of new mortgage agreements year-on-year in July is reflective of the pent-up demand for mortgages.

“If you can succeed in getting a mortgage it makes a great deal more sense financially than renting – for two reasons – in all but the two most expensive areas in which to buy property in Dublin (Dublin 4 and 6 ) it is cheaper to service a mortgage than pay rent, substantially so in very many areas of the country. ( Rental Price Report Q 2 2021 ).

“Secondly increased competition in the mortgage market with the entry of non-bank lenders Avant Money and Finance Ireland is leading to better more secure mortgage products, specifically genuinely long-term fixed interest rates, for the very first time. Avant Money is offering a 30 year fixed rate mortgage starting from 2.85pc depending on loan to value,” she said.

Ms McGovern said what everyone needs now is for the Government’s Housing for All Plan to work in delivering more homes as quickly as possible to satisfy pent-up demand and to ensure stability in house prices.

She said it would appear that competition in the mortgage market is also delivering for those who must renegotiate their mortgages.

“Many people are coming off mortgage rates that were fixed for periods of two and three years. For a long time the risk for them was that they would come out into a much higher rate.

“Today’s figures show a weighted average interest rate of 2.61pc on renegotiations which is very much improved on what we would have seen previously,” she said.

She advised all mortgage holders to review their mortgages and if in doubt seek impartial advice.

“This is particularly relevant for those who took out mortgages over the last number of years and have not reviewed their situation. Because rates have dropped there is likely much to be gained by switching. Often existing lenders will review the interest rate with the prospect of losing a mortgage holder to a competitor,” she said.

She also said switching lenders is much less complicated than it used to be but the onus is on the mortgage holder to initiate it. A new valuation of the home would be needed but the cost of that and any legal fees should be well worth the effort.

And she said many mortgage holders are unaware that most lenders have a lower interest rate where there is a better LTV (loan to value ), the ratio of the loan to the current value of the home. Home owners can also avail of very competitive green mortgage rates offered by a number of providers for homes with better BER ratings.

Ms McGovern said despite the improving situation the differential in today’s figures between Irish mortgage holders and those in the euro area generally is that Irish mortgage holders are paying an excess of 1.45pc over the euro area average.


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