Central Bank publishes further research on mortgage switching

• Research shows many consumers who have switched had a positive experience; however, lenders could do more to facilitate mortgage switching.
• Central Bank will consult on introducing measures to facilitate mortgage switching by consumers minded to switch their mortgage.
• Dedicated mortgage switching staff, the ability to compare mortgage products, a less time consuming process and clarity around timelines were highlighted as potential stimulants to mortgage switching.

Previous research by the Central Bank showed that borrowers can save significant sums of money by switching their mortgage. The research published today seeks to gain a better understanding of consumers’ perceptions, attitudes and experience of mortgage switching in order to identify areas where further action by the Central Bank could assist borrowers who are considering switching their mortgage. While many consumers surveyed, who have switched their mortgage, reported a positive experience, others reported many aspects of the switching process that could be improved to better facilitate mortgage switching. In addition to the consumer research, the Central Bank also conducted research amongst lenders, mortgage intermediaries and law firms in order to gain insights into their views of the mortgage switching process.

The Central Bank has shared the findings from today’s research with all mortgage lenders and will publish a consultation paper in Q3 2017 proposing additional measures to facilitate mortgage switching for those consumers minded to switch. Specific proposals to be explored will include:

• lenders providing greater clarity to consumers on the switching process itself, including as to timeframes and potential costs of switching;
• the benefits of lenders having dedicated switching contact points;
• further disclosure rules at trigger points in the mortgage life cycle e.g. end of a fixed interest-rate term; and
• the scope for increased co-operation amongst lenders during the mortgage switching process.

This research continues the Central Bank’s work to maintain a strong consumer protection framework for mortgage borrowers and builds on new protections introduced by the Central Bank for variable rate mortgage holders which enhance transparency and facilitate consumer choice.

Acting Deputy Governor Bernard Sheridan said: “The research shows that those borrowers who switched their mortgage had a positive experience. It is also clear that lenders could be doing more to facilitate consumers who are thinking about switching, be that switching to another lender or to another mortgage product with the same lender. Lenders need, therefore, to examine these findings carefully. The Central Bank will progress its work in this area by publishing a consultation paper later this year which will set out proposed measures to help any consumer who is considering switching”.

The main findings from the research were:

Consumers see mortgage switching as a significant undertaking

• 44% of all mortgage holders surveyed felt that the switching process would be too complex.
• 38% of those surveyed who switched their mortgage reported that a reduction in the amount of paperwork/documentation required for the mortgage switching process would improve the process.

Consumers also see mortgage switching as costly

• 37% of those surveyed who have switched their mortgage with the same lender said there were additional processing fees that they were unaware of.
• 33% of those surveyed who considered switching but did not, reported that a lower cost process would encourage them to switch.

Consumers who switched their mortgage had a positive experience

• 81% of mortgage holders surveyed who switched their mortgage agreed that they understood what was going on at each stage of the process. 
• 27% of mortgage holders surveyed who switched mortgage lender reported no obstacles to switching their mortgage.

Consumers said that they might consider switching if they could be certain that they would make a saving over the lifetime of the mortgage

• 54% of all mortgage holders surveyed agreed that they might switch if there was a long-term guarantee of an interest rate saving. This figure rose to 77% amongst mortgage holders surveyed who considered switching but did not switch.
• 42% of mortgage holders surveyed who had never switched said that lower interest rates would encourage them to switch.

Easy comparison of mortgage products is a key step in the mortgage switching process

• 32% of mortgage holders surveyed who switched their mortgage disagreed that it was easy to compare mortgages from different lenders.
• 30% of those surveyed who have switched mortgages disagreed that mortgage products were simple to understand.
• 31% of mortgage holders surveyed said they were aware of the CCPC’s consumer help website (www.consumerhelp.ie), but only 11% had visited this website and only 6% had used the mortgage comparison tool.

A single point of contact or a dedicated switching team would encourage and assist with the mortgage switching process

• 36% of those surveyed who switched their mortgage reported that they had to chase their lender to be kept informed during the mortgage switching process.
• Across all elements of the research, a single point of contact or dedicated switching teams who would assist consumers throughout the switching process, were highlighted as possible stimuli to switching.

Improvements to the specified timelines around the mortgage switching process are also needed

• 28% of mortgage holders surveyed who switched mortgage lender reported delays with the legal process as an obstacle in the switching process.
• 19% of those surveyed who switched mortgage lender reported delays with the new mortgage lender approving the mortgage application as an obstacle in the switching process.
• 28% of mortgage holders surveyed who considered switching but had not said that a less time consuming process would encourage them to switch.

Notes:

About the Central Bank’s mortgage switching research

This research comprised of two stages:

• Consumer research (both quantitative and qualitative) which was externally commissioned by the Central Bank and carried out by Behaviour and Attitudes. This consisted of six focus groups and a quantitative survey of 2003¹ mortgage holders . The consumer research was undertaken in November/December 2016, and
• Engagement with those working in various aspects of the mortgage industry.

The results of this research will inform our Policy work in the area of mortgage switching, and particularly, the consideration of further consumer protection rules in this area.

The research has been published and is available here (PDF 1.39MB).

The previous research referred to above is available here (PDF 455.48KB).

¹ Mortgage holders includes anyone who currently holds a residential mortgage.