Don’t be at the mercy of banks and switch mortgages to get best deal, says FF MEP as ECB hike rates
THIS week, the European Central Bank hiked interest rates by 0.75 per cent to curb soaring inflation.
It means bad news for hard-pressed homeowners, who will be hit with higher repayments.
Homeowners are facing increases of more than €100 per month on a €300,000 mortgage following the latest rate hike.
One way to save on your mortgage is to root out the best deal from switch lenders.
However, banks are said to be moving at a “snail’s pace” processing applications.
Writing in The Irish Sun on Sunday today, Fianna Fáil MEP, BILLY KELLEHER says the Irish Central Bank must stand up to the banks here and force them to speed up the time it takes to switch mortgages.
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THERE really are no positives when it comes to last week’s ECB rate rise of 0.75 per cent.
It’s going to cost mortgage holders a lot of money if they’re on variable or tracker mortgages.
The only silver lining is that rate increases generally tend to remind people to check their existing mortgage rate and to potentially switch to a different bank offering a lower rate.
Unfortunately, mortgage switching doesn’t happen nearly often enough in Ireland.
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When rates were low, it wasn’t such a necessity, but with ECB rate rises already confirmed, it really is worthwhile for homeowners to check whether there are better rates available.
Yet, we are hearing from mortgage holders that banks are moving at a snail’s pace, and dragging their feet, when it comes to switching their loans.
In what should be a very straight-forward process, some customers are waiting unacceptably long times for the switch.
And every month of a delay means another higher than necessary mortgage repayment. A code of conduct has been put in place by the Central Bank telling banks how to process mortgage switchers.
ONLY 1% OF HOMEOWNERS CONSIDERING SWITCHING
They were amended a number of years ago to ensure greater transparency for mortgage holders and to simplify the process.
The Central Bank, only this month, signalled that they would review them again.
A recent Daft mortgages report outlined how only one per cent of mortgage holders are considering switching this year.
I fully expect that number to rise as we approach the end of the year, but unless banks speed up their processes, consumers won’t reap the full benefits.
WEAK IRISH BANKING SECTOR
In addition, the benefits are substantial. The same Daft report suggested that 87 per cent of mortgage holders would save on average €90 per month by switching mortgage provider.
You don’t have to think too hard to guess why banks aren’t moving as fast as they should to help their customers switch.
As a member of the European Parliament’s Committee on Economic and Monetary Affairs, I see on a daily basis how weak the Irish banking and mortgage sector is.
Ultimately, a lack of competition due to a failure to create a European Banking Union is the root cause of our problems. With KBC and Ulster Bank now out of the market in Ireland, there is even less competition.
LONG-DELAY PROBE NEEDED
That’s why I’ve written to the Consumer Protection Department in the Irish Central Bank asking them to investigate the long delays for people trying to switch their mortgages.
In addition to looking at the main issue of a lack of interest in switching among mortgage holders, they must look at the inefficiency of the banks’ processing of switching applications.
There is a clear conflict of interest in allowing banks to determine how long it takes an application to be processed.
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Delays like this only serve to put people off switching their mortgage. Other countries don’t tie themselves up in knots when it comes to mortgages.
The Central Bank needs to stand up to the banks and back consumers.
