Menu
18/11/2015
Banks Accused Of Not Being Serious About Mortgage Switching
Fianna Fáil has accused Ireland's banks of not being serious about offering mortgage switches.
The party's finance spokesperson, Michael McGrath, highlighted new figures from the Central Bank that reveal just 712 customers have been able to switch from one mortgage provider to another. Deputy McGrath said that the figures are "indicative of a lack of seriousness on the part of banks about competition in the mortgage market".
"Earlier this year the Central Bank report on mortgage switching found that over 100,000 residential mortgage holders could save on their monthly repayment by changing mortgage provider," Deputy McGrath said.
"Nearly 27,000 could save in excess of €10,000 over the remaining life of the mortgage. This actually understates the true number who could benefit from switching as bank rules exclude anyone who had an arrears balance on the account during the previous 12 months or families with low or negative equity.
"There are potentially huge savings for families but the reality is that only a paltry number of mortgage switching transactions are actually being completed in the market. While there has been a modest pick-up in the level of mortgage switching in recent months, of the total number of mortgages drawn down to date this year just 3.7% were customers changing lender. By contrast in 2005 13% of mortgages transactions were switches.
"Minister Noonan seems to be relying on competition to deal with the scandal of high variable rates, given his recent hands off approach. These figures are a reminder of the reality that there are very real obstacles in the way of customers who are hoping to make savings on their mortgage. It appears the banks are quite satisfied to maintain the status quo in the Irish mortgage market where product innovation is frowned upon.
"One stark example of the impact of this is in the case of Danske customers who are in negative equity and are paying 4.95%. The option of switching to a lower cost lender is effectively closed to them. As they are leaving the Irish mortgage market Danske are immune to market pressures or moral persuasion.
"To minimise the potential barriers to mortgage switching there is now a clear case for the Central Bank to introduce a statutory code of conduct on the subject. The Central Bank has a successful code in place for the switching of current accounts from one financial institution to another. The same now needs to be done for mortgage holders who wish to switch their mortgage. A statutory code on mortgage switching would set out in detail the obligations on financial institutions involved in a mortgage switching transaction. A strong code would provide certainty to mortgage holders about the process involved and ensure the mortgage holder's rights are protected.
"The true test of banks' commitment to competition will be whether they actually can deliver a significant increase in the number of mortgage switches completed. To date they seem to be more interested in talking about it than actually delivering for their customers," concluded Deputy McGrath.
(MH)
The party's finance spokesperson, Michael McGrath, highlighted new figures from the Central Bank that reveal just 712 customers have been able to switch from one mortgage provider to another. Deputy McGrath said that the figures are "indicative of a lack of seriousness on the part of banks about competition in the mortgage market".
"Earlier this year the Central Bank report on mortgage switching found that over 100,000 residential mortgage holders could save on their monthly repayment by changing mortgage provider," Deputy McGrath said.
"Nearly 27,000 could save in excess of €10,000 over the remaining life of the mortgage. This actually understates the true number who could benefit from switching as bank rules exclude anyone who had an arrears balance on the account during the previous 12 months or families with low or negative equity.
"There are potentially huge savings for families but the reality is that only a paltry number of mortgage switching transactions are actually being completed in the market. While there has been a modest pick-up in the level of mortgage switching in recent months, of the total number of mortgages drawn down to date this year just 3.7% were customers changing lender. By contrast in 2005 13% of mortgages transactions were switches.
"Minister Noonan seems to be relying on competition to deal with the scandal of high variable rates, given his recent hands off approach. These figures are a reminder of the reality that there are very real obstacles in the way of customers who are hoping to make savings on their mortgage. It appears the banks are quite satisfied to maintain the status quo in the Irish mortgage market where product innovation is frowned upon.
"One stark example of the impact of this is in the case of Danske customers who are in negative equity and are paying 4.95%. The option of switching to a lower cost lender is effectively closed to them. As they are leaving the Irish mortgage market Danske are immune to market pressures or moral persuasion.
"To minimise the potential barriers to mortgage switching there is now a clear case for the Central Bank to introduce a statutory code of conduct on the subject. The Central Bank has a successful code in place for the switching of current accounts from one financial institution to another. The same now needs to be done for mortgage holders who wish to switch their mortgage. A statutory code on mortgage switching would set out in detail the obligations on financial institutions involved in a mortgage switching transaction. A strong code would provide certainty to mortgage holders about the process involved and ensure the mortgage holder's rights are protected.
"The true test of banks' commitment to competition will be whether they actually can deliver a significant increase in the number of mortgage switches completed. To date they seem to be more interested in talking about it than actually delivering for their customers," concluded Deputy McGrath.
(MH)
Related Irish News Stories
Click here for the latest headlines.
19 March 2014
Consistency Needed In Bank Handling Of Mortgage Arrears
Greater consistency is needed in how different banks handle mortgage arrears, Fianna Fáil has said.
Consistency Needed In Bank Handling Of Mortgage Arrears
Greater consistency is needed in how different banks handle mortgage arrears, Fianna Fáil has said.
28 July 2016
Banks Results Highlight Need For Reductions For Mortgage Customers - FF
Recent financial results and trading statements of banks has highlighted the need for a reduction of interest rates for variable rate mortgage customers, Fianna Fáil Spokesperson on Finance Michael McGrath has said. "I note with interest that AIB has confirmed today that its net interest margin has increased by 16 basis points to 2.
Banks Results Highlight Need For Reductions For Mortgage Customers - FF
Recent financial results and trading statements of banks has highlighted the need for a reduction of interest rates for variable rate mortgage customers, Fianna Fáil Spokesperson on Finance Michael McGrath has said. "I note with interest that AIB has confirmed today that its net interest margin has increased by 16 basis points to 2.
14 March 2012
Banks Seek More Powers Over Mortgage Arrears
Banks may be given greater powers to contact customers who are in mortgage difficulty, under proposals being considered by the Central Bank. Under the existing code of conduct set out by the Central Bank, lenders are forbidden from contacting customers who are in arrears more than three times in one calendar month.
Banks Seek More Powers Over Mortgage Arrears
Banks may be given greater powers to contact customers who are in mortgage difficulty, under proposals being considered by the Central Bank. Under the existing code of conduct set out by the Central Bank, lenders are forbidden from contacting customers who are in arrears more than three times in one calendar month.
24 March 2015
FF Call On Central Bank To Directly Engage With Mortgage Providers
The Central Bank has been urged to engage directly with mortgage providers in an effort to secure a reduction in the standard variable rate. Making the call Fianna Fáil finance spokesperson Michael McGrath said that "it is clear that there is a wide and growing disparity with existing customers on SVRs very much at the bottom of the pile.
FF Call On Central Bank To Directly Engage With Mortgage Providers
The Central Bank has been urged to engage directly with mortgage providers in an effort to secure a reduction in the standard variable rate. Making the call Fianna Fáil finance spokesperson Michael McGrath said that "it is clear that there is a wide and growing disparity with existing customers on SVRs very much at the bottom of the pile.
10 August 2010
AIB Pay Staff Green Fees Despite Mortgage Hike
It has emerged the Anglo Irish Bank is to raise its variable mortgage rate despite offering to pay employees’ golf club fees and leisure club memberships worth millions of euro per year. In recent months, the bank has faced near closure, an ongoing Gardaí investigation, and required an immense taxpayer subsidy.
AIB Pay Staff Green Fees Despite Mortgage Hike
It has emerged the Anglo Irish Bank is to raise its variable mortgage rate despite offering to pay employees’ golf club fees and leisure club memberships worth millions of euro per year. In recent months, the bank has faced near closure, an ongoing Gardaí investigation, and required an immense taxpayer subsidy.
-
Ireland WeatherThis Evening and Tonight:Frequent, often heavy showers of rain, sleet and snow will affect most parts this evening and overnight, but are likely to be most frequent across the northeast. Minimum temperature -1 °C.
