Switchers can save thousands despite lack of mortgage cut action

Savvy switchers can now save €7k a year more by swapping the dearest mortgages for the cheapest.

That’s a gap of €600 a month in payments, our study of the mortgage market reveals.

AIB, along with its offshoots EBS and Haven, have crept out in front with mortgage rates of between 3.3% and 3.5%.

But these apply only to 'green' loans on 4-5yr fixed rates for homes with a BER of B or better.

In the only other action since July on the mortgage market, ICS and Finance Ireland have lowered their extremely high rates to a still high 5.9% and 6.45% respectively.

Yet despite this slow pace of interest rate cuts in the current cycle,  there are bargains aplenty for savvy switchers.

Yet still most people turn their noses up at the biggest money-making opportunity there is.

“Switcher figures remain low in Ireland and even with the prospect of saving tens of thousand of Euros mortgage holders are still slow to switch,” says mortgage broker Martina Hennessy of Doddl.ie.

 “If we do not switch, there is nothing to then compel lenders revisiting their pricing for existing mortgage customers on variable rates.

The European Central Bank disappointed borrowers over rate cuts.

So far it has delivered just 0.25% out of a total of 2% cuts anticipated over the next two years.

Even then, Irish lenders have generally failed to pass on even this small cut to non-tracker customers.

Yet, if you’re on a dearer rate you could still save many thousands per year – and up to over €100k over 20 years - just by switching lender. 

And there’s the added bonus of teaching stingy banks a lesson!

The gap between the dearest and cheapest loans seems to have narrowed slightly but it is still twice what it was in 2023, according to a switching index Doddl.ie.

Source: CCPC.ie and Bonkers.ie.

 NOTE: Avant calculates rates and fees differently which leads to slightly  higher repayments than usual. *Same rate available from Cana Credit Union but only for <€150k and over 10 years. *** Lower rates also available depending on loan type.

Our table shows that you could pay €6700 more with an 80% loan-to-value mortgage. But rates are even higher for 90% LTVs and the gap for these would be €7500.

Mortgage broker Doddl.ie came up with a similar gap of €7800 in its switcher index earlier this year.

That was over twice as high as the €3,587 figure it came up with in 2023, showing that the opportunity for mortgage savings has never been greater.

The biggest gap in our list is between Finance Ireland and the cheapest credit union loans.

This is because Finance Ireland relies on the wholesale money market for its funding, where rates were high, whereas the credit unions can dip into members’ savings to fund their loans.

Newcomers Nua mortgages and Moco also rely on the money markets and have this is why they have so far not made much of an impact in bringing down rates.

They have to “offer rates slightly higher than the pillar banks due to their reliance on markets,” explains mortgage broker Martina Hennessy of Doddl.ie.

But “as funding costs decrease, these new entrants, along with Finance Ireland and ICS Mortgages, are expected to cut rates and increase their market share.”

Their customers’ patience must be wearing thin as Euribor money market rates have already fallen to just above 3.5%. They will certainly be rewarded if they look around for better deals.

Interbank’s purchase of Avant Money is another positive move that is already having an impact. Six months ago, Avant didn’t make our best buy list; now it offers two of the top five fixed rates.

“The anticipated entry of Revolut into the mortgage market in 2025 is also a positive development,” says Ms Hennessy.

“With its existing customer base and technological capabilities, Revolut has the potential to quickly become a significant player in the Irish mortgage market.”

Our list shows that the best credit union rates still knock the socks off bank mortgages – but only if you’re lucky enough to qualify for one of the cheaper ones.

Credit union rates vary widely and may have restrictions. The best we’ve found is Youghal Credit Union’s 2.9% offering – a rate matched by Cana Credit Union, albeit with lower limits to the term and size of the loan.

The ICS and Finance Ireland rates are also outliers as these are not huge players in the mortgage market.

But even if you’re on an average bank mortgage rate – such as PTSB’s 4.5% - you’d still save a couple of hundred a month (and over €2k a year) by seeking out the best deals shown here in our table.

“Variable rates start from 3.75% but go right up to 7.65% and so for anyone set on a variable rate mortgage then doing your research or getting market based advice is important,” advises Ms. Hennessy.

 “Lenders tend to focus competitive new business rates on fixed rates. This year in particular the Green mortgage space has seen the largest rate decreases but all Green rates are fixed in nature.

 “At end Q1 there was just under €11bn in mortgages sitting on variable rates in Ireland (€15.4bn on tracker variable rates). These are mainly existing business customers of the banks, the majority of new mortgages continue to be drawn down on fixed rates.”

However, with further cuts in rates on the way, thanks to both to ECB moves and competitive pressure, borrowers should be wary of locking into the long-term fixed rates that the banks are plugging right now. Or they could have to pay over-the-odds for the long term!