Tens of thousands of Irish mortgage holders are significantly overpaying on their mortgage but are still reluctant to switch to lower rates, which is hindering market competitiveness and generally keeping rates high. 

This is the contention of the Association of Irish Mortgage Advisors (AIMA) who say that, based on assessment of figures, the volume of mortgage switching remains at one quarter of what it was at the peak of the boom, and that the vast majority of the 150,000 – 200,000 mortgage holders in Ireland on standard variable rates are overpaying by hundreds, if not thousands of Euro, each year.

AIMA say the latest BPFI report on Mortgage Drawdowns found that less than 5,887 (approximately 4% of all SVR mortgage holders) switched in the last 12 months - compared with 25,937 in 2007.

AIMA believe that less than one in five of these households are on the best available rate and therefore the majority could save by switching. In addition, if more people switched, AIMA say the banks would be more likely to lower their rates to protect their market share.

AIMA contend that although there has been some growth in the number of people switching year on year, the pace has been too slow – particularly in the last two years when rates have dropped for new mortgages and banks have become increasingly competitive on fixed rates.

The broker representatives argue that homeowners should be coming in their droves to actively switch and save hundreds, if not thousands of Euro, but that inertia and/or apathy appear to be preventing this.

Commenting on the matter, Chairperson of AIMA, Trevor Grant said, "The 2020 mortgage switching figures should be at least double those of 2019 if there is to be any hope of driving down interest rates and ensuring all mortgage holders are getting the best value on the market. While recent figures show that the switching trend is growing ever popular, the numbers are still below what they should be."

Source: www.businessworld.ie