Changes to the Central Bank’s Consumer Protection Code which aim to give customers more transparency and make it much easier to change mortgage providers, have just come into effect. Irish Banks are now required to give mortgage customers more information about their loans in order to help them save money by moving to a better rate or switching provider.
The mortgage switching in the Irish market is extremely low at less than 1%, despite the huge savings that can be made.
Recent studies discovered that around one in five Irish homeowners could save money by switching interest rates, but the research from the Central Bank found that most people never switch their mortgage is because they don’t realise how much they could save, finding it extremely difficult to compare mortgages and believing the process is too difficult or will take too long.
To make it easier for mortgage holders to switch their mortgage, the Central Bank has introduced six new measures that lenders will now have to follow, the Irish Independent reports.
As part of the new rules:
- – Lenders are now required to give customers 60 days’ notice before their fixed term ends and provide details of the new rate that will apply from the expiry date, as well as other possible options available;
- – Lenders will have to let variable rate mortgage (other than a tracker rate) customers know each year, as to whether or not they can move to a cheaper interest rate with them, based on how much equity is in their home;
- – Lenders will have to clearly explain the pros and cons of any mortgage incentives such as cashback schemes;
- If requested, Lenders will have to provide home owners, an indicative comparison of how much their existing mortgage costs versus other options offered by them.
- – If requested, Lenders must also give switchers all the necessary information they need to switch, including how long this process will take.
- – Finally, the changes also introduce a required 10-day turnaround for a decision by the Lender on a fully completed mortgage application.
The aim of these changes is to encourage customers to shop around and make the switch if it will save them money. The new requirements on lenders should make it easier for mortgage holders to spot and perceive if, and when, they should switch lenders during their loan period, in order to get on a better rate and make sizeable savings on the remainder of their loan. Also, if they do decide to switch, the process should be a little bit quicker and easier to complete.