Alison Fearon from Switcheroo.ie explains the impact increased mortgage approvals is having on timeframes and costs for mortgage switchers.
The Central Bank of Ireland recently published figures showing that the volume of new mortgage agreements amounted to €687 million in June. This represents an increase of 40 per cent on the same month a year earlier.
This is largely driven by the increased level of savings by people over the pandemic enabling them to have saved the 10% deposit to get them on the housing ladder. Irish Household’s net worth (assets minus liabilities) has increased by €89bn since June 2020.
What does this mean for switchers?
Historically lenders aimed to complete the switching process in ~6 weeks. The idea being that as the individual is already paying the mortgage, switching to a cheaper rate shouldn’t require as detailed an underwriting process. As a result, mortgage holders could wait until two months before their fixed period had expired to start the process to see if switching could save them money.
While the timelines significantly vary by lender, the switching process for some institutions is taking over 4 months to complete. One or two of the lenders are managing to stick to the six week time frame but these lenders are only accessible via mortgage intermediaries such as Switcheroo.ie
It is worth noting that in general due to the huge volumes of applications being assessed and a more detailed underwriting process undertaken by all lenders as they need to weigh up the impact of Covid on customers’ affordability; the process is taking 4 months. This means that if you wait until the last month of your fixed term you could end up having to pay the more expensive standard variable rate (svr) until the switch completes. Some banks’ SVR is as high as 4.5%; with rates now as low as 1.95% you need to make sure that you ready to switch over day 1.
So, start your switch today!
At Switcheroo.ie we would recommend that Switchers start the switching process when there is 6 months left on the fixed rate. We would look across the lenders in the market to assess, based on the current loan to value, what is the best rate/product available for the customer and provide details of the analysis.
We can always manage the completion timeline to tie in with the fixed term ending to avoid any breakage fees, but we cannot speed the process as up to avoid you slipping onto an expensive standard variable rate.
With switching rates now as low as 1.95%, you should check when your fixed term is up and contact switcheroo.ie to get the ball rolling!
Instagram - @switcheroo.ie | LinkedIn - Switcheroo
Alison Fearon is Managing Director of Switcheroo.ie
Panda capital Limited T/A Switcheroo is regulated by the Central Bank of Ireland.
