Fianna Fáil TD for Donegal Charlie McConalogue is urging fixed rate mortgage holders to check with their lender to see if they can switch and get a better interest rate without being hit by large penalties.
A new EU rule – the Mortgage Credit Directive – has changed the way lenders calculate a breakage fee, which should reduce the large penalties which had been used by banks to keep customers with them.
Deputy McConalogue explained, “I have come across a number of cases recently where mortgage holders have been able to switch lender to avail of a better rate without having to pay a large penalty to their original provider. These are people who were on a relatively high interest rate and can now make major savings by switching to a variable or lower rate with their current provider or
by moving their homeloans to another provider.
“Fixed rate mortgage holders owe more than €14bn to lenders – some may have secured a competitive rate but many more are stuck on high rates of more than 4% or 5%. Under this new rule, they can break their current agreement and move to a better deal.
“Mortgage holders with high fixed rates should get in touch with their bank to find out if there is a charge associated with exiting the loan early. The Central Bank should also be making fixed rate mortgage holders aware of this new rule by undertaking a public awareness campaign”.