The Central Bank is taking a step forward to give some advantage to mortgage holders, especially for people who could easily save money by switching their mortgage plan.
Central Bank’s recent actions came from the fact that a fifth of mortgage holders can save a good amount of money by doing so, 16,000 can save something like €1,000 in the first year and about 27,000 switchers can even save €10,000 or more during the lifetime of the mortgage if they switch to a better plan. Although this may look obvious, a survey showed that only 1 in 10 mortgage holders actually change their plans because the rest think that the process is long and complicated and don’t realize how much money they can actually save by switching.
Starting January 1, 2019, the following changes to the 2012 Consumer Protection Code will take effect:
- While lenders don’t currently need to notify customers of new rates and other options at the end of their fixed rate term, they’ll have to do that at least sixty days before the fixed-rate term’s end.
- Upon request, lenders must provide a comparison of the interests of the current term and any alternative mortgage customers can get from the same bank, along with a link to the Consumer Protection Commission website, which contains a complete comparison table.
- Lenders should inform customers of any cheaper interest rate to which they can switch.
- Banks must give full details to customers regarding the switching process. Should a customer decide to switch, the lenders review process mustn’t take more than ten business days.
The Central Bank also took action against lenders that were advertising vague and unclear mortgage promotions, especially regarding incentives like cashback deals.
A recent decision by the Regulator forced lenders to change three-quarters of their promotional policies as it was found to be misleading.
Banks will now have to clearly show the true cost of these incentives in their promotional campaigns.
The Central Bank’s decisions are expected to drive competition in the industry, as lenders will try to attract new customers through reduced interest rates.
Gráinne McEvoy, the Central Bank’s director of Consumer Protection, stated that the new regulations are aimed at providing customers with the chance of getting lower fees whenever it’s possible.
When asked about the real intentions behind the decisions, McEvoy said that “These changes are aimed at making it easier for consumers to obtain this key information so that they are able to easily identify whether they are able to make savings by switching their mortgage and make the process quicker and easier to complete if they do decide to switch.”
Author: Fran Cooke