Shopping around could save you €100,000 on a mortgage
The Irish Financial Services Regulatory Authority (IFSRA) also said comparing rates for car loans, credit cards and personal loans could result in significantly reduced repayments.
The findings come as economists predict a 1.5% rise in interest rates here over the next 18 months. This follows an interest rate hike in the US the first in four years.
IFSRA found some lenders charged up to 2% less for mortgages than others. Borrowers with a €250,000 loan over 25 years could save €105,000 by opting for the cheapest lender.
IFSRA consumer affairs director Mary O'Dea said borrowers should compare rates before taking out a loan of any size.
By reviewing rates it was possible to save up to €1,600 on a €15,000 car loan over three years, said Ms O'Dea.
She advised borrowers to:
Continue to review the rates charged by their bank.
Save on loan repayments by switching to a more favourable rate.
Ms O'Dea also said homeowners who were deterred from switching mortgage lenders by apparently high legal costs should keep in mind the overall saving they could make.
IFSRA's research compared lending rates charged by 16 banks and building societies between 1998 and 2003. The authority's report, published yesterday, found Irish banks were good value for variable rate mortgages and that borrowers faced lower interest rates than elsewhere in Europe.
IFSRA also said there was "no evidence" to suggest banks here had been slow to pass on cuts in interest rates to customers.
But there was bad news for people with overdrafts, car loans and credit cards. IFSRA said average loan spreads, the difference between the rate at which banks borrow and the rate they charge to customers, had increased during the period under review. IFSRA also found the average rate charged by each bank varied from 8.95% to 11.95% for personal loans and from 10.7% to 11.7% for overdrafts.
Ms O'Dea said borrowers should switch lenders if they could get a better rate from another bank. She said customers taking out a loan should check that they would not be penalised for repaying the loan early if they wanted to switch banks.
Consumers also needed to be aware that they could sign up for different products from different banks, so they could hold a credit card from one bank and a car loan from another if they wished.
IFSRA also found Irish credit card holders fared worse than those in Britain. British banks charged an average of 11.6% over the basic lending rate for credit card borrowing, while the figure for Irish banks was 15.9%. Average credit card interest rates charged by Irish lenders ranged between 17.1% and 22.3%.
The Irish Bankers Federation, which represents more than 60 financial institutions in Ireland, said IFSRA's study showed the Irish mortgage market was competitive. But it had concerns over the way IFSRA carried out its research and said a significant majority of Irish borrowers benefited from interest rates that were below the European average.
The Consumers Association of Ireland said the report was "a damning indictment of the restrictive nature of the Irish credit market".
: Shop around for the cheapest loan and compare interest rates by using the annual percentage rate (APR).
Ask about costs other than interest, such as arrangement fees.
Be aware of possible penalties for paying off the loan early and read the fine print.
Try to pay off credit card debt in full each month to avoid interest payments.
Get in touch with the lender if you have any difficulty in meeting repayments or contact your local Money Advice and Budgeting Service (MABS) or via www.mabs.ie.
: Take on more debt than you can afford.
Use credit cards as a source of long-term loans
Exceed an overdraft limit. The penalties for doing so are very heavy.
Ignore letters from your lender.
: Shop around for the best advice and the best deal, and consider the policy and track record of individual lenders in relation to interest rate cuts.
Take account of how many lenders your broker represents. Contact lo-call 1890 200 469 to check the register of mortgage intermediaries.
Compare interest rates using the APR (annual percentage rate) and take into account other services. Even a small variation in interest rates can have a significant effect on the cost of your mortgage.
Shop around for life (mortgage protection), and home and contents insurance. Your lender is legally obliged to insist you have certain insurance, but you are under no obligation to accept their offers.
: Panic and take the first product you are offered. First-time buyers may feel like they have won the lottery by just being approved, but you may get a better deal elsewhere.
Be seduced by freebies and special offers. Introductory and first-time buyer packages can save you money in the short term, but consider the costs for when your introductory rate runs out.
Ignore your mortgage; keep an eye on interest rates and make sure you know what is available.
Default on a payment. Your home is at risk if you do not keep up payments.
Ignore your debt problems. If you are in financial difficulty contact your lender. Alternatively contact MABS.
: Keep a record of your transactions check deposit slips and ATM receipts against statements.
Check all bank statements, including fee-advice.
Keep details of your accounts in a safe place.
Shop around to check alternative accounts. Do they offer better returns or cheaper facilities?
Complain if you are not happy with the service.
: Keep too much money in a current account earning little or no interest.
Reveal your PIN or passwords to anyone.
Have your PIN written down and kept with your bank card.
Delay if you believe there is a mistake.
Throw out old statements and receipts with your rubbish. Shred, tear or burn them.
: Decide first what type of cover and other benefits you want.
Get quotes from as wide a range of companies as possible via brokers, phone, internet.
Ensure you get full credit for your driving record.
Make sure you get your renewal notice and details of any no-claims bonus at least 15 working days in advance of the renewal date.
Consider the conditions under which you are granted, and could lose, no-claims bonuses.
Make full disclosure about your driving record, including any offences, or you risk invalidating your insurance and breaking the law.
Bargain with your current insurer if you receive a lower quote elsewhere. They may agree to match or better the quote in order to keep your business.
: Skimp on the shopping around.
Forget you are the customer in the transaction. You may be able to bargain for a better deal.
Allow anyone else to use your car unless you are certain they are insured to drive it.
