Thousands of homeowners have to pay an extra €9,000 on their mortgage because they are reluctant to switch lenders.
Research by a broker claims that 87% of mortgage holders would save money every month if they switched mortgages, but only 1% will do so this year.
Homeowners could save an average of €90 on their repayments from the first month if they switched mortgages now, according to broker Daftmortgages.ie.
Over four years, the savings from changing and fixing interest rates now amounts to just over €8,900 for current mortgage holders, the brokerage claims.
However, financial experts have pointed out that there are currently huge delays for people trying to execute changes.
That could leave those paying lawyers and appraisers for the work associated with moving to a new lender at a loss if the lender they’re moving to raises rates before withdrawing their new mortgage.
Experts said it might be easier for those with variable rates and those who now have low-value fixed rates to secure better rates with their existing lenders.
Most lenders currently do not charge a breakout fee for those who exit a fixed rate to lock in one at a lower interest rate.
Daftmortgages.ie, a mortgage broker that is part of the Daft.ie property website, said 87% of mortgage holders would save an average of €90 on their repayments from the first month if they switched mortgages now .
According to the Central Bank, there are about 720,000 outstanding residential mortgage accounts.
If 87% could save by switching providers, that means too much money is being paid on 626,000 mortgage accounts.
Paul Monahan said homeowners overpaying for their mortgages include all those with variable rates, many of those with existing fixed rates that have since become cheaper, and about four in 10 people on trackers.
The European Central Bank’s (ECB) decision to raise its key rate by 1.25% means that some of those on trackers are now paying more on trackers than some of the best fixed rates still available in the market.
Some 4,410 mortgage transfers took place between January and June this year.
An analysis of 150 mortgage accounts of people who contacted Daftmortgages.ie found almost half said they were unsure whether they would save money by switching their mortgage.
About four out of 10 people in contact with the broker said they had not considered switching because of the effort required to switch.
And a quarter of those with a fixed rate thought having a fixed rate was a barrier to switching mortgages.
Mr Monahan said: ‘Now is a great time to consider changing your mortgage rate. Mortgage interest rates have been falling for a decade, but we are now at rock bottom.
“Rates from some lenders have started to increase, but many have yet to do so. You can’t cap your energy bill, but you can cap your mortgage.
He said anyone who currently has a mortgage can switch their mortgage to another provider to get a better rate and save thousands of dollars.
The Central Bank said last month it had no plans to take banks to task as homeowners risk being caught up in the wave of interest rate hikes because overstretched banks are too slow to process their mortgage change requests.
The regulator does not act even if the delays constitute a violation of its consumer code.
It now takes up to four months to make a change. The reason is a backlog of borrowers rushing to switch to a lower-cost provider before mortgage rates rise.
Any delay will leave borrowers at high risk of missing the interest rates currently offered.
Banks lend at the rate at the time a mortgage is taken out, not at the rate offered at the start of the process when approval is granted.
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