Mortgage experts say homeowners could save up to €100,000 by switching to the lowest rates.
With specialists predicting the competition will begin to “heat up”, AIB has become the latest bank to announce a cut in its fixed loans.
It was claimed 220,000 borrowers currently on standard variable rates of up to 4.5% could benefit.
AIB announced yesterday it is cutting its three and five-year fixed rates from 2.85% to 2.55% and its green five-year fixed rate from 2.5% to 2.45%. This is its second mortgage rate reduction in less than 12 months.
It comes on foot of rate cut from KBC Bank just last week and
from Ulster Bank last month.
Martina Hennessy, a mortgage expert at doddl.ie, told RTE Radio 1’s Today With Sean O’Rourke: “You’d hope over the next few months other lenders who haven’t reduced rates recently may start to drop their rates. People don’t realise they can switch or how much the savings can be. They fear it’s complex and costly – it isn’t.”
Ms Hennessy said if a homeowner with a 4.5% rate on a 30-year mortgage with a balance of €300,000 switches to the lowest rate of 2.2%, monthly repayments would fall from €1,520 to €1,139.
This would mean a savings of €381 per month or €22,860 over five years. But homeowners could save more than €100,000 – and cut nearly 10 years off their home loan by making the same payments at the lower rate.
Meanwhile, MyMortgages.ie spokesman Joey Sheahan said he expects competition to “heat up”.
He added: “Existing and prospective mortgage holders should take note – there is great value on fixed rates.
“If you are applying for a mortgage, then you absolutely need to look at what all lenders are offering.
“And if you are already tied into a mortgage contract, then you should look at what your switching options are.”
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