September 19, 2021

MP Now News

Mortgage News

Homeowners paying more than €4,000 in extra mortgage repayments every year

New research has found that if they do not switch lenders, homeowners needlessly pay an average of € 4,097 in additional mortgage repayments per year.

This is an increase of € 657 over the past 12 months with monthly savings of up to € 135 per € 100,000 owed on a 25 year mortgage for those who switch.

Homeowners who switch to raising funds to improve the energy efficiency of their home can now get similar or lower monthly repayments thanks to the introduction of new Green tariffs in the market, as noted by doddl.ie’s mortgage conversion index.

The volume of mortgage changes has increased by over 35% year-over-year as more households benefit from the recent downward movement in mortgage rates.

More and more switchers are now turning to independent market-based advice, as four mortgage lenders, including those with the lowest market rates and long-term fixed rates, only offer their products through brokers.

Martina Hennessy, General Manager of doddl.ie, said, “This represents a positive change in consumer behavior as mortgage applicants seek market-based advice and lower interest rates.

“All banks claim to be customer-centric, but it is the new entrants and non-bank lenders who lead the way in terms of the lowest market rates and new innovative products such as total mortgage rates.

“It is now up to the mortgage applicants to embrace these lenders, not just look at the status quo and consequently put pressure on the pillar banks to go in the same direction.”

A new housing development in Dublin (Niall Carson / PA)

The numbers for those topping up their existing mortgage are also up dramatically, with top-up mortgage drawdowns increasing 43% year over year.

“We are seeing a significant increase in mortgage owners looking to free up equity in their home for home improvements and fund extensions,” added Ms. Hennessy.

“After spending most of the past year at home, people find that in many cases their surroundings are not suitable for their needs.

“Given the lack of high-quality living space, mortgage holders are increasingly opting for renovations with projects ranging from minor modernizations to larger extensions and attic extensions for more living and working space.”

Research earlier this year showed that more than half of households are considering home improvement, motivated by increasing the comfort and warmth of their homes.

“Those who upgrade their home’s energy rating to B3 or higher are increasingly getting one of the green rates currently offered by lenders such as Haven Mortgages, AIB, Ulster Bank and Bank of Ireland,” said Ms. Hennessy.

“Haven Mortgages is the latest lender to introduce a green rate product with a four-year fixed rate of 2.15% on all loans up to 90% value.

“This tariff is available for buyers and changers, whereby the changer is also entitled to a cash amount of 2,000 euros when changing.

“If DIY is making your BER cheaper, lower green rates may mean your monthly payback won’t increase, even if you free up equity to work.

“A mortgagee with a low floating rate of 3.15% who wants to free up equity of € 25,000 for home improvements with a current mortgage of € 250,000 would currently repay € 1,205 per month over a period of 25 years.

“If this customer freed up equity of € 25,000 to bring the total mortgage to € 275,000 and were eligible for a green rate discount, their interest rate would be 2.15% and their repayment would be € 1,186 per month.”