One in five Irish mortgage holders could see their mortgage payments fall by switching providers, but less than 50 people are switching every month, according to a new report from the Central Bank.
Based on the analysis of more than half a million mortgages, the Central Bank found money could be saved on up to 21 per cent of loans by switching.
Of those, about 16,000 could save more than €1,000 in the first 12 months and about 27,000 have the potential to save more than €10,000 over the lifetime of the loan.
The report found 33 per cent of the sample total could make savings by switching but are not in a position to switch for a variety of reasons, including: small loan values, the existence of an arrears balance on the account in the past 12 months or a loan-to-value ratios of more than 90 per cent.
The report ruled out upfront financial costs as an impediment to switching. It said the charges faced by consumers when switching mortgage were primarily made up of legal and valuation fees, which can amount to about €1,300. The majority of lenders cover at least €1,000 of this fee, so the net financial cost of switching an estimated €300.
Almost 70 per cent of potential switchers would cover this cost within one year of switching, the report said.
“The number of incoming switchers averaged just 38 per month at the five main banks since January 2014,” the report said. It suggested one possible explanation for the low number is that their existing bank may match the best offer available to customers who attempt to switch.
“Increased information and greater transparency on mortgage products and switching options would be beneficial,” it said.