Homeowners urged to act now to avoid higher mortgage payments

Experts warn that holders of either variable or fixed rate mortgages with less than two years to run need to act now to avoid difficult repayment increases.

They say that people who put out historic low-term fixed-term contracts in the next few years will face immediate price increases of more than 1 percent.

The Q2 Mortgage Conversion Index found that homeowners are paying an average of €4,595 in additional mortgage payments annually by not changing lenders.

That’s about 500 euros more than 12 months, she said.

Mortgage switch expert Martina Hennessy urges people to act now (PA)

This figure rises to €4,678 if your home has a B3+ building energy rating and you qualify for a green rate, offering a market-leading flat rate of 1.9 per cent.

The index is based on the average mortgage taken out for new lending in both first-time buyers and moving second-hand markets, currently €284.903.

Mortgage conversion activity is up, with approval volume up 153 percent year-over-year and mortgage conversion numbers now double what they were four years ago.

Martina Hennessy, managing director of doddl.ie, said: “Two things are certain – we are in a period of continuous rate increases and core banks, which have some of the highest rates in the market, will soon implement rate increases.

“The vast majority of mortgage holders will not feel any effects from the recent rises as with AIB, the Bank of Ireland or the permanent TSB, who have not changed their rates.

“If you are using a variable rate, and unless you plan to pay it directly in the short term, you need to act now and set your own rate to avoid impending price increases.

“Even a phone call to your bank will save you 1 percent right away, and several percentage points a year all the way.

“The only people who won’t be hit immediately are those who rely on medium-term fixed rates.

“For people who don’t have one year left, next year will be a major concern as they will emerge from a historically low rate and affordability may become an issue given the overall cost-of-living increases that are occurring.

“Our advice is not to wait until next year – now is the time to reconsider your mortgage to secure your next fixed rate rather than waiting for your rate to expire.

Our advice is to keep prices fixed for five or seven years and not jump at the first price offered. Get advice from a broker and you will save yourself thousands of payments.

“Higher interest rates will have a huge impact on new mortgage applicants, as the higher the rate, there will be a negative impact on affordability. This reduces the amount applicants can borrow.”

Ms Hennessy said banks need to take their service levels into account when announcing and enforcing rate increases because many of them are almost always outside the central bank’s response time to transfer applications.

“Banks need to give due consideration to applications in progress when implementing rate increases to be fair to customers working through the application process that has been delayed by the banks’ service levels.” She added.