Not Switching May Cost You Over €10,000
Category : Mortgage News
The ‘too much hassle’ mentality when it comes to switching mortgages may cost mortgage holders thousands according to preliminary results from our Mortgage123 Switcher Survey.
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The Mortgage123 Survey invites Irish mortgage holders to answer a few simple questions relating to their current mortgages. The respondents may test their own knowledge of their mortgages. Mortgages are like any other service provided to customers, but for some reasons mortgage holders in Ireland do not view mortgages the same way as their broadband, electricity or phone.
Preliminary Results Mortgage123 Survey
The preliminary results from 28 respondents show that 18% did not know what mortgage rate they were paying. Over 48% were paying over 2.3% interest rate per annum and could possibly switch to a better provider.
While 89% of respondents were aware that they could switch their mortgage, only 14% had switched their mortgage in the past 5 years. This was not the case for switching other service providers, such as phone and electricity services, where 83% switching was reported.
The main reason provided by our respondents were that they thought it will be too much Hassle (61%).
Diagram 1 Reasons for Not Switching Mortgage Providers
Source: Preliminary results from Mortgage123 Survey.
These responses, although inconclusive, suggest that Irish mortgage holders are not very familiar with what a mortgage switcher involves. When we calculate for them how much they could save if they reduce their mortgage term by as little as 0.1% p.a. or shorten the mortgage term by a few years, they are pleasantly surprised.
Switching Your Mortgage Recommended by Central Bank
In fact, the Central Bank of Ireland is attempting to raise awareness of mortgage switching. New Central Bank rules relating to current mortgage holders have come into force since January 2019. These rules are in response to 2015 findings that more than one fifth of borrowers could save money by switching. The new rules will make it easier for bank customers to get information about savings on their mortgages. Furthermore, this will encourage competitiveness in the market and better mortgage rates for customers.
Although the Central bank has extended new rules to raise awareness of switching, identifying the best deal on the market may require some professional advice. There isn’t enough awareness that brokers can do that switch at no cost and recommend the best available switch.
At Mortgage123, we pride ourselves on our Mortgage Switcher service.