One in five homeowners could save money by switching mortgage lenders, according to the Central Bank.
An analysis of more than 500,000 mortgages – in a Central Bank Economic Letter – found that in some cases, switching could produce savings of over €10,000 over the lifetime of the loan.
While this applies to 26,000 mortgages holders, half of those with mortgages cannot find a cheaper rate, mainly because they are on a tracker.
Some mortgage holders could be €1,000 better off in the first 12 months, while others could see a claw back of more than €10,000 over the lifetime of the loan, the bank said
A third of homeowners could make savings by switching, but are not in a position to do so because of arrears or high loan to value ratios.
Currently just 38 homeowners a month are switching at the five main banks.
The Central Bank has said greater transparency on mortgage products and the options to switch would help, and that the potential for savings may present opportunities for new entrants to the Irish market.
Minister for Finance Michael Noonan urged mortgage holders to investigate savings they could make by switching to another lending institution.
He said there were quite significant savings to be made if people switched from a variable mortgage to a fixed rate mortgage in another institution.
He said it was clear they were coming to the bottom of the interest rate cycle, with both Janet Yellen of the US Federal Reserve and Mark Carney of Bank of Ireland indicating interest rates could rise in the autumn.
He said mortgage holders could secure a bigger saving if they were to fix their mortgages at the bottom of the cycle before rates start to rise again.
Mr Noonan said he would be meeting the banks again to discuss mortgage rates in September when department officials have evaluated the options.
He welcomed the Central Bank report on the issue as a useful piece of work.
Check out the rates on offer from banks at present by visiting www.myhome.ie/mortgages
- Have you considered switching?
- Do you feel there is enough competition in the market at present?
- Are you struggling with your existing payments?
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