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.