Best and worst mortgage rates reveal €37,000 gap

The gap between the best and worst mortgage rates now on the market could see a first time buyer paying €37,000 more than necessary, if rate differences were maintained over the period of their loan, according to a review of the mortgage rates available from top lenders by mortgage brokers Simply Mortgages.

Simply Mortgages undertook the rates review to highlight the importance of homeowners undertaking regular assessment of their mortgage borrowings to ensure that they are with the most competitive lender.

"The potential for saving is especially important in light of recent ECB interest rate increases," read the report.

The review compared the standard variable, tracker and fixed interest rate products of the top 8 mortgage providers, for a euro227,000 loan on a house valued at euro320,000 over a variety of different terms. The potential saving of euro37,000 arises if the difference between the best and worst tracker rates were maintained for the duration of a 30 year term.

On the €227,000 loan, over a 35 year term, the most competitive 3 year fixed rate was 5% or €1,242 per month, currently provided by Bank of Ireland.

The highest rate was 5.18%, or €1,272 per month charged by AIB.

The difference between these two offers is a potential saving of €12,600 over the lifetime of the mortgage.

In terms of fixed rates, the biggest potential saving was found to be with those who opted for a 5 year fixed rate. The most competitive rate offered for a 35 year mortgage of €227,000 was 4.94% or €1,237 per month provided by First Active and Ulster Bank.

The highest rate was 5.25%, or €1,283 charged by AIB. This equates to a potential saving of €19,320 over the lifetime of the mortgage.

According to Simply Mortgages there has been a move away from the once popular standard variable rate, with more people now opting for tracker and short to medium term fixed rates.

Managing director of Simply Mortgages Peter Bastable, said: “This was a point in time survey and it’s obvious that rates will change and the differences between rates will rise and fall over any mortgage term. However, it does highlight the point that many people could be saving a significant amount of money by conducting a regular mortgage audit.”

“As mortgage interest rates creep upwards it is vital that homeowners are aware of what rates are available in the marketplace and where the best value can be found.

"If homeowners are thinking of fixing, or coming to the end of their current fixed term, they should consider the options available in order to achieve the best deal bearing in mind that banks will soon amend their rates to take into account the latest ECB rate rise.”

Bastable continued: “We are not advising homeowners to switch provider every year, but we are saying that an annual review will ensure homeowners switch mortgage provider at the right time.”