Mortgage switching in Ireland is on the rise again as homeowners look to take advantage of declining European Central Bank (ECB) rates, according to online broker Doddl.ie.
After a surge in 2022, switching activity had declined sharply as ECB rate hikes pushed mortgage costs higher and attractive fixed-rate deals disappeared. However, Doddl’s latest Mortgage Switching Index has identified a 45% increase in switching activity in 2024, signaling renewed interest among borrowers seeking better deals.
Sharp Rise in Mortgage Switching
Recent data from Banking and Payments Federation Ireland (BPFI) shows that in the final quarter of 2024, €331 million was drawn down by switchers—a 45% increase compared to €228 million in the same period of 2023. The figures also reflect a 14% rise from the previous quarter, indicating growing momentum.
While interest rates have declined, they have not dropped uniformly across all lenders, creating significant variations in mortgage costs.
“Rates have decreased but not across all lenders, so there’s a huge gap between the highest and lowest rates in the market,” said Martina Hennessy, CEO of Doddl.ie.
Potential for Significant Savings
The broker highlights that this rate gap represents a potential saving of €7,000 per year for some borrowers, making switching an attractive option.
Additionally, rising property values and home energy efficiency upgrades could allow some borrowers to access better loan terms, further boosting incentives to switch lenders.
New Market Entrants Increasing Competition
The Irish mortgage lenders market has become more competitive in recent months, particularly with the entry of new lenders.
“Quite recently, both MoCo and Núa have reduced their rates,” Hennessy said. “These brokers are introducing innovative mortgage products and the strongest digital mortgage origination in the market, giving Irish consumers much-needed choice.”
She expects new players to intensify competition, challenging traditional lenders with more attractive pricing and streamlined processes.
Will ECB Rate Cuts Lead to Further Mortgage Rate Drops?
Despite expectations of further ECB rate cuts in 2024, some borrowers may be waiting before committing to a new fixed-rate mortgage.
However, Hennessy cautioned that banks may have already factored in future rate reductions, meaning additional significant drops in mortgage rates are unlikely.
“Lenders at the top of the scale may drop their rates, but those already close to 3% may have very little room to cut further,” she explained. “Going forward, competition rather than rate reductions will likely be the key driver in the mortgage market.”
She also warned against assuming that ECB rate cuts will automatically translate into lower mortgage rates, as banks will adjust pricing based on market forces rather than following ECB decisions directly.
For now, with stronger competition, lower rates, and streamlined processes, mortgage switching is once again becoming a popular financial move for Irish homeowners seeking better deals.
