One in five on variable rates save €500 on mortgage bills

ONE in five variable rate mortgage holders have seen savings of more than €500 on their repayments since the European Central Bank (ECB) started cutting interest rates last year.

Many of the homeowners are using the savings to go on summer holiday and donate to charity, according to a study conducted by the Irish Mortgage Corporation.

The news of such hefty savings will be difficult to stomach for the one-in-three mortgage holders who are on fixed rates and have not benefited from ECB cuts.

Director of the mortgage corporation Frank Conway said that, despite the economic downturn, a summer holiday still remains a priority for homeowners. That, he said, was according to almost half of respondents.

“Putting money into a savings account, paying off loans and paying down their existing mortgage is a very common theme.

“However, interestingly, and despite the economic gloom – or perhaps because of it – many respondents are determined to take their summer holidays and are using some of the savings from their mortgage repayments to pay for it.”

Mr Conway said it appears summer holidays have become an important part of family time which many people are not about to give up.

The survey was conducted in April and May and found 42% of people on variable rate mortgages have experienced a drop in their monthly mortgage repayments of between €250 and €500 as a result of the drop in interest rates since September 2008.

Almost half of the homeowners have used the opportunity to set up a savings account, while a third said they will use some or all of their savings to pay off outstanding debts.

One in five have decided to pay extra off their mortgage and one in six have put some of the extra cash into a pension fund.

Mr Conway said an interesting result is that one in five decided to give some of the money to charity.

“In 2005 and 2006 we conducted a similar survey among SSIA savers, and when asked how they planned to use their windfall, charitable donations featured much lower.

“In 2005, only 1.4% of people intended giving some of their savings to a charity. In 2006, this had risen to 3.6%. It would appear the current economy, while dreadful, may be making us all a little more caring,” said Mr Conway.