80% of variable rate customers could save by switching

But probably the most fundamental point is that a borrower with a 50% LTV mortgage who is paying BoI 4.5% SVR can switch to AIB and pay... 3%.

It's still a full 1.5% higher than they would be paying in the average Eurozone country.

Brendan
 
Brendan Burgess said:
Here is the quote from the Central Bank's Opening Statement

"The vast majority of SVR borrowers in positive and negative equity could benefit from either switching to another provider or to another product with the same provider. Switching offers the dual benefits of potentially reducing monthly costs and/or the length of the mortgage, with potential savings of tens of thousands of euros. The more people who start to switch, the less the ability the banks will have to differentiate between new borrowers and existing."

And in response to Michael McGrath

Sibley
97% of SVRs can switch to a lower rate.

Where does this come from?



But many can't switch due to NE or arrears.
Click to expand...

Are you saying that it's untrue to say that most people can switch?
 
Brendan Burgess said:
Hi Bronte

I am questioning it. I presume he has some research to back it up.

Brendan
Click to expand...

Brendan,

I also question the percentage Sibley mentioned.

It suggests that only 3% of SVR borrowers either cannot switch or would not benefit from switching.

Brendan Burgess said:
But many can't switch due to NE or arrears.
Click to expand...

I addition to those borrowers there would surely be a lot of borrowers with either small mortgages or who are close to the end of their mortgage term, i.e., the outstanding mortgage is less than €30,000.
 
The 80% figure came from the Irish Times report on the committee hearing.

"As many as 80 per cent of borrowers currently on standard variable rate (SVR) mortgages could save money by switching to alternative products, according to the Central Bank".

Incidentally, I disagree that a variable rate borrower paying 3.5% to AIB (or any other lender for that matter) would be "stupid" to switch to a one-year fix with KBC @ 2.9% that rolls over to then prevailing new business variable rate for the relevant LTV.

If there's a better rate available elsewhere at the end of the one-year fix, the borrower can switch again (or fix again if that's still the best deal available).
 
Sarenco said:
The 80% figure came from the Irish Times report on the committee hearing.

"As many as 80 per cent of borrowers currently on standard variable rate (SVR) mortgages could save money by switching to alternative products, according to the Central Bank".
Click to expand...

What do you mean the IT reported it, are they not reporting what the man said, so he is the source?
 
He said:

“So, if I look at the banks – I can’t talk about individual banks – but if I look at the banks that are differentiating between, (heavily differentiating between), the fixed rate and variable rate pricing in terms of the products that are being offered to both new and existing customers, then north of 97% of SVR customers can switch from their current mortgage rate to a lower one …”.

Later, he said:

“… as I said overall, in terms of SVR borrowers, we think it’s more than 80% of them can save money by switching ….”


This is a link to the committee meeting.
 
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Ah, thanks for that.

So when read in the context, the 97% figure seems to relate to BoI and KBC (who are "heavily differentiating" between fixed rate and variable rate pricing) whereas the 80% figure relates to the broader market. No?
 
You could be right but a lot of what Sibley said was unclear.

I still think though the claim that 80% of SVR customers could save by switching products is dubious.

Given the problems with negative equity and mortgage arrears in addition to the switching rules could it really be that only 20% would not benefit?
 
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