The value of mortgage switching rose by an unprecedented 45pc in the last year, the latest doddl.ie Mortgage Switching Index has found.
This trend is set to accelerate as new digital-first lenders enter the market, slashing mortgage approval times from weeks to just hours.
Some savvy mortgage holders are now managing to save over €7,000 off their biggest yearly outgoing.
Over €331m in switching financing was drawn down in Q4 2024 compared to €228m in the same period in 2023, with the figure also rising 14pc on the previous quarter.
The rise in switching follows multiple rate cuts over the past six months, with some lenders reducing their rates by as much as 1.5%.
Martina Hennessy, CEO of doddl.ie noted that switching is being driven by more than just rate reductions.
“The number of people who can now save big by switching has increased as lenders increasingly reward those owning more energy efficient homes and mortgages with lower loan to values,” said Hennessy.
“And now new entrants like MoCo and Nua Money are starting to really shake up the market. These broker-only lenders are slashing mortgage approval times from weeks to hours – which is a real game changer- and just last week Nua Money announced rate reductions of up to 0.75 per cent.”
Meanwhile, new figures from the Banking & Payments Federation Ireland (BPFI ) reveal an 18% year-on-year increase in personal loan lending for home improvements.
Those carrying out retrofits or sustainable energy home improvements are improving their BER ratings and meaning they can access lower Green rates.
The market has also seen continuous double digit property price inflation, which continuously gives people access to a better rates based off lower loan-to-values.
The gap between the highest and lowest rate on the market is now double with the lowest rate currently standing at 3pc and the highest rate at 6.15pc.
Switching has become a core product for lenders and is now no longer the daunting task it once was – seven lenders will now offer cash back switcher packages to cover legal costs associated with switching.
The process from application to approval to final drawdown is also much quicker than ever before
“When we started the Index five years ago, the average switching time was eight weeks. However, this has changed completely with one of our recent switches being completed from application to draw down in 10 working days,” said Ms Hennessy.
The Q4 doddl.ie Mortgage Switching Index has found a €7,189 difference in annual payments between the highest and lowest mortgage rates currently available.
The Index is based on the average new mortgage drawn down in the last quarter of €334,184 over 25 years.
Potential savings amount to €599 per month due to rate variations across the market.
For those who do not have a tracker rate it is important to be aware that ECB rate cuts may not lead to corresponding cuts by the Irish lenders who price off Euribor rates and not ECB rates.
Pillar banks will have already priced in forward rates in their cuts over the last three months and the rate curve is at or near the bottom of what is expected, according to Ms Hennessy.
Mortgage rates in Ireland have been reducing since May of last year, some by over 1.5pc.
Banks rate decisions are based on the cost to acquire funds plus operating costs and the expected profit – given current funding costs any further significant rate cut may be driven by competitive forces.
“Lenders at the top of the scale may drop their rates but lenders who are currently at and close to 3pc may have very little room to continue cutting,” said Ms Hennessy.
“This means it is likely to be competitive forces – driven by consumers switching and lenders vying for market share – that impact further rate cuts, rather than funding costs.”
