Wide differences in mortgage rates leave some policy holders paying double

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The gap between the highest and lowest mortgage rates in the Irish market has widened with the highest rate now double the lowest, new figures show.

Mortgages rates here range from 3.45% to 7.15%.

In the last six weeks, there have been rate decreases from six lenders as the impact of reduced funding costs starts to positively impact pricing. This presents huge potential savings for homeowners who switch lenders – especially as non-bank lenders have not yet reduced rates.

Based on the average new mortgage drawdown of €309,502, the doddl.ie Mortgage Switching Index published today finds some homeowners could be paying a record average €7,812 more annually by sticking with their current lender – an increase from €3,587 a year ago.

This has resulted in a record 42% gap between 25-year monthly repayments of €1,566 on the lowest rate and some householders on €2,217 at the highest end of the scale.

“The expectation that disinflation would lead to rate decreases meant that many mortgage holders chose to hold on to variable rates in Q1 until rates dropped,” Martina Hennessy, Managing Director of doddl.ie, said.

“In the last six weeks we have seen rate decreases from six lenders as the impact of reduced funding costs starts to positively impact pricing,” she said.

“Non-bank lenders – ICS, Finance Ireland and MoCo – have not yet reduced rates. These lenders are reliant on markets for their financing, so we should see them also pass on reduced costs of funding,” she added.

Separately those whose homes achieve higher energy efficiency standards may be eligible for Green mortgage rates that can save them an additional €300 a year with the lowest on the market now starting from 3.45% – a potential saving per the index of €8,113 a year.

The number of Green personal loans increased by over 90% in 2023, according to recent figures.

“If you have carried out home improvements which positively impact the building energy rating of your home then you could be eligible for a much lower rate on your mortgage by switching,” said Ms Hennessy.

A big question for those rolling off fixed rates right now is whether rates will drop further.

Tracker mortgage holders, whose rate is directly linked to the ECB refinancing rate, can be very hopeful of cuts to their mortgage rate this year with market analysts believing that we could see rate decreases from next month.

There is a strong expectation that the European Central Bank will cut interest rates when it meets on June 6.