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Sharp increase in number of mortgage holders switching

The level of mortgage switching continues to increase sharply - albeit off a low base.

Figures for August show that 555 households received approval to switch their mortgage in the month, an increase of almost 67pc on last year.

First-time buyers accounted for the lion's share of activity last month with 1,979 mortgage approvals, figures from the Banking and Payments Federation Ireland show.

People are again moving their mortgages between banks to avail of lower rates.

Some banks are offering rates as low as 2.3pc, a fraction of some of the variable rates existing mortgage holders are being charged.

Homeowners are able to avail of mortgage switching due to rising property prices, experts said. This gives them more equity in their homes, and makes them an attractive proposition for lenders.

Someone who has a mortgage of €250,000 and is paying a 4.3pc standard variable rate could save over €250 a month by switching to the cheapest rate on the market.

The banking figures show that the value of mortgage switches they have approved was €132m, an increase of over 81pc over the year.

Across all types of borrowers, banks approved a total of 4,185 mortgages last month.

The figures show 1,979, or almost half, of all mortgages approved last month were for first-time buyers, while mover-purchasers accounted for 1,187. The average approval amount was €231,600, up 3.6pc on the year.

Daragh Cassidy, of price comparison site, said: "The continued increase in the level of switching is indicative of increased competition in the market and continued rise in property values."

But he added while the trend is encouraging, at less than 1pc of the market it's too small, given the savings involved.

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