Consultation Paper proposes enhanced measures to aid mortgage switching

• Measures aimed to help consumers make savings on their mortgage repayments
• Standardised mortgage switching information for consumers
• Time bound mortgage switching process

The Central Bank today published a Consultation Paper proposing new measures which would enhance the framework of protections for mortgage holders. The Central Bank is proposing new measures to require lenders to:

• inform consumers about other available mortgage options that could save them money and about the impact of mortgage-related incentives;
• help consumers to compare their existing mortgage to other mortgage options;
• provide consumers with standardised switching information; and
• follow a time-bound switching process.

A copy of the Consultation Paper is available and the consultation process will be open for comment for three months until 1 November 2017.

The Central Bank’s 2015 research shows that many consumers can make significant savings by switching their mortgage. Information to help consumers compare mortgage rates is widely available, including the Competition and Consumer Protection Commission’s (CCPC) online mortgage comparison tool.  However, consumer research conducted by the Central Bank also shows the need for greater transparency for consumers which would clearly inform them about the potential savings they could make by switching and the switching process itself. The  Central Bank has also had regard to market developments in the areas of fixed rate mortgages and rates based on loan-to-value (LTV), as well as the offer of incentives to consumers to take out a mortgage.

Having concluded this work, the Central Bank is proposing the introduction of statutory requirements to support consumers considering switching their mortgage, to ensure that such activity takes place within a transparent framework that protects the best interests of consumers and ensures they are treated fairly. If implemented, these measures will build on the strong framework of protections already in place for mortgage borrowers, including the enhanced transparency measures introduced for variable rate mortgage holders in 2016.

Acting Deputy Governor Bernard Sheridan said, “The Central Bank has put in place a strong framework to protect consumers both when taking out a mortgage and throughout the term of the mortgage.  In proposing these new measures, we aim to build on these strong protections. These measures will require lenders to provide  consumers with the necessary information at the right time to consider their options  and ensure that the process facilitates consumers who want to switch their mortgage.”

Note

 The 2017 Consumer Protection Outlook Report noted the research the Central Bank launched into mortgage switching in late 2016 and, on conclusion of the research, committed to bringing forward any proposals for consultation based on these findings in 2017.

Further information is available on the enhanced transparency measures for variable rate mortgage holders introduced by the Central Bank in 2016.

In late 2016, the Central Bank commissioned research into consumer perceptions and attitudes to mortgage switching, as well as the experience of those who had switched. The Central Bank conducted the research to help identify areas where further action by the Central Bank could assist borrowers who are considering switching their mortgage. The Central Bank published the report on the research findings in April 2017. The report contained several positive findings from consumers who had switched their mortgage. However, it also highlighted the need for greater transparency for consumers, both about the potential savings they could make by switching and the switching process itself.

Also available is the Central Bank’s 2015 research on the potential to save money by switching mortgage.

Comments on the proposed measures from all interested parties are welcome. The Central Bank also encourages partial responses from stakeholders on those questions that they believe are most relevant to them. Submissions received will be made available on our website after the deadline for receiving submissions has passed.

This paper will be open for comment until 1 November 2017.  Submissions should be made to [email protected] clearly labelled with subject title “Mortgage Switching Measures.”