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Granting your Switch Wish

It is obvious that the changing mortgage rules have made it more difficult for first time buyers to enter the property market in recent years. Despite recent changes allowing for a decrease in the necessary deposit required (abolishing the 225,000 cap on a 10% deposit) the continuing rise in house prices has all but ruled many first time buyers out of the market for the foreseeable future. An issue which affects many but has seen much less column inches is the issue of switching your mortgage to another bank. This is something which has been increasingly difficult to accomplish in recent years with the ever changing financial market, but there may be a distant light at the end of the tunnel for those wishing to switch their mortgage in the future to reduce their repayments.

The Central Bank has recently stated that it will be considering imposing new rules which will make it easier for people to switch their mortgage to another lender. This exciting development follows recent research by Behaviour and Attitudes which found that only 4% of mortgage holders had switched to a new lender. Switching your mortgage to another lender can often result in a reduction in your repayments and other benefits as your needs grow and change in your home.

The proposal by the Central Bank would ensure that banks must offer greater clarity to their borrowers to ensure that they have all the information available regarding switching, something which is sorely lacking in the current market. There is also a suggestion that the banks will be required to ensure that borrowers have all the information regarding switching mortgage product and the associated costs of this.

The fact that so many of those surveyed had never even considered changing their mortgage is surprising given that Ireland’s variable mortgage rates have been found to be among the highest in the Eurozone. Lenders do not currently offer enough accessible information about these issues and as such it is not something at the forefront of buyer minds. Acting Deputy Governor Bernard Sheridan has been quoted as saying:

“It is clear that lenders could be doing more to facilitate consumers who are thinking about switching.”

The Central Bank suggests these new changes will be beneficial as over 109,000 people could save money by switching mortgages and will reportedly publish a paper later in the year in which these proposals will be set out.

Should you require any help, guidance or advice on these or any other business and financial matters please don’t hesitate to contact us here at Ecovis DCA where our dedicated advisors will be delighted to be of assistance.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

MORTGAGE WOES KEEP BUYERS ON THEIR TOES.

Mortgage rules have been a point of contention in Ireland for some time now and whether house prices fall or rise, it has become increasingly difficult for those hoping to gain footing on the first step of the housing ladder. Last year, mortgage rules were changed to mean that only 3.5% of income can be borrows, and there must be a 10% deposit on all mortgages up to €220,000, and a further 20% on any cost above this figure.

 

At the time of this change it was suggested that these rules would be in place for a period of a year and then re-examined. As they were put in place in February last year, all eyes will be on these rules to see if there is any change which might allow for easier purchasing. DNG have suggested that they would like to see the borrowing limit raised to 4% and the 10% deposit rule extended to €300,000 as they have seen over the past year that many people are becoming trapped by these rules and are unable to buy due to higher house prices and stricter rules.

 

It has been reported this week that we may see an even bigger shake up in the mortgage industry. An Australian lender, Pepper is reportedly set to offer new incredibly competitive mortgage rates which will target first-time buyers in particular. This arrival of a new lender is expected to push current Irish lenders into offering new lower rates in order to respond to competition and demand.

 

Already since the announcement we have seen Bank of Ireland offer a new bonus. This bonus would see them add 10% to first time buyers onto their existing deposit savings. Additionally, Bank of Ireland were already offering 2% back of every new mortgage.

 

Pepper is said to be set to offer rates as low as 3.55% for both first time buyers and those looking to switch lenders. Pepper Ireland boss Paul Doddrell has suggested that Pepper will also be first in line with offers for those who have found themselves refused by other banks, including those who are self-employed. It is suggested that Pepper will also be able to lend to those who found themselves in arrears during the financial crisis, but have now found their way back to meeting payments.

 

Whilst these new offers may not be a complete end to Irish mortgage woes as these offers will only be available through brokers, the suggestion of another adjustment of the overly tight mortgage rules will be a welcome one for many first time buyers and prospective first time buyers. It is hoped that we will see a general reduction in rates, with the onset of further competition in the Irish mortgage market. If you require assistance with your own or your company’s finances whilst hoping to gain a mortgage, please don’t hesitate to contact us here at DCA accountantswhere we are always happy to help.