People in Galway are paying an average of €3,236 more on their mortgage each year than they have to by not switching lenders.
The latest doddly Mortgage Switching Index has found that people could shave ten years off their mortgage by switching lenders, and keep their payments at the same level.
The spread between he highest and lowest interest rates available on the market has now grown to 2.25% or €290 per month in terms of monthly repayments for an average priced home.
That means that homeowners could potentially save up to 27% on their monthly repayments, a figure that has grown by 6% in the past year.
In the final quarter of 2019, the highest rate of payments on a 25 year mortgage were €1,346, while mortgage holders on the lowest rate are paying €1,056 per month.
The figures in the latest doddl index are drawn from the average mortgage in new lending for first time buyers and second hand movers, which was €242,175 in Q4 2019.
While this is the national average, prices and potential savings vary wildly based on the geographic region.
The average homeowner of a 3-bedroom semi in Dublin could save €5,019 a year based on on 90% finance over 25 years on an average house price of €396,450.
However, homeowners in other large cities such as Cork, Galway, Limerick and Waterford will save an average of €269.68 per month, or €3,236 annually on average prices of €255,625.
The Index looks at the total number of switcher transactions per quarter as a percentage of all home loan transactions, excluding Buy To Let mortgages, to give an accurate picture of principal private dwelling house credit.
“While mortgage switching is traditionally associated with reducing interest rates and lowering repayments, a huge benefit of switching can be to reduce the term of the mortgage,” said doddl.ie Managing Director Martina Hennessy.
With banks now offering 35 year mortgages that expire when the borrower is 70, many people currently have mortgages which won’t be paid off until after they retire she said.
“For example, a couple who took out their mortgage five years ago, on a 35-year term, currently repay €1,520 per month on a standard variable rate of 4.5%.”
“If they were to switch their mortgage balance of €300,000 to a five-year fixed rate of 2.2% then their repayments would drop to €1,139 per month, meaning a saving of €381 per month or €22,860 over five years.”
“However, by continuing to make the same mortgage repayment on the 2.2% rate, they could decrease their term from 30 years to just over 20 years – saving tens of thousands in interest based on their reduced term.”
“We are finding a lot of clients in the 45-plus age range are now opting for this pathway when switching their mortgage.”
The rate of mortgage switching has more than trebled in the past four years, the Index shows.