Thousands of homeowners are unexpectedly eligible for lower mortgage rates. This is due to surging house prices over the last two years.
The benefit will apply to around 90,000 homeowners who drew down their mortgages between the years 2018 and 2020, according to the Doddl.ie mortgage switching index.
Martina Hennessy, Doddl.ie MD, says that, “With house prices increasing by over 10pc annually, opportunity is now knocking for those who have bought as recently as 2020 to take advantage of lower loan-to-value mortgage rates which could save them more than €20,000 over seven years.”
She explains that mortgage interest rates start to get a lot more competitive at 80pc loan-to-value as banks tier their rates based on this calculation.
The European Central Bank’s (ECB) President Christine Lagarde said this week that a rise in European wholesale borrowing rates could not be ruled out in 2022. This would mean that those on variable rates and homeowners coming off a fixed rate will face higher mortgage rates. But Ms Hennessy comments that recent homeowners are at an advantage.
“With double-digit property inflation in the past few years, coupled with some of the loan having been paid off, anyone who took out a mortgage in 2019 or 2020 with an original loan-to-value of 90pc should be at 80pc loan to value now,” she said.
“A loan to value of 80pc means a homeowner has built up equity of 20pc in their home. Now is the ideal time for these homebuyers to avail of some really good long-term rates to reduce their monthly repayments while guarding against expected rate rises in the future.”
Hennessy adds that the switching index shows homeowners are needlessly paying an average €4,308 in extra mortgage repayments per year by not switching lenders. “There are huge savings to be had by switching mortgages – especially for people who have recently entered the market on higher rates and feel that they can’t move for a few years.”
LSL News.