Competition and low interest rates have already delivered significant benefits to mortgage borrowers and the entry of the Den Danske, which has recently purchased National Irish Bank (NIB), promises further gains for homebuyers.
"The Danes have wasted no time in delivering money-saving mortgage products to the Irish Market, " said Dermot Jewell, chief executive of the Consumers' Association of Ireland. "Most consumers could save hundreds and many more a thousand euro per year, if they switched from their existing mortgage provider," he said.
Borrowers know that tracker mortgages with fixed margins of 1 to 1.3 percentage points above the European Central Bank (ECB) rate have been available in the past year. However, typically only very large borrowers with low loan to value ratios (LTV's or the percentage of the property's market value which is borrowed) could avail of the cheapest loans in this area.
For smaller borrowers, NIB is offering a tracker mortgage with a margin of 0.79 of a percentage point above the current European Central Bank (ECB) rate of 2 per cent.
This means that the average homeowner can avail of rates previously only available to bigger borrowers. The 'best buys' available to mortgage holders will depend on two things: (1) the size of your mortgage and (2) the loan to value (LTV) ratio of your borrowings (i.e. the percentage of your property's value that is borrowed.
Many lenders will offer extra discounts to homeowners who are borrowing 60 per cent or less of the value of their home. If you are in this category, Ulster Bank has some good offers. For example, if you open a U First current account, you can avail of a U First Tracker mortgage rate of 2.85 per cent or a 0.85 percentage point margin above the ECB.
If you don't open a current account with Ulster Bank you can still avail of their U First tracker mortgage, but at a 0.1 per cent of a point more - or a rate of 2.95 per cent currently.
Borrowers with LTV's of less than 40 per cent - a category most likely to include those trading up - can avail of First Active's tracker mortgage with a guaranteed margin of just 0.75 per cent above the ECB rate for the entire term. This equates to a rate of 2.75 per cent - the lowest published tracker rate in the market for those with large mortgages and expensive homes.
"Anyone with a mortgage should be aiming to switch to a tracker variable mortgage as early as possible," said Ronan Mackay, Business Development Manager with Dublin based NC Mortgage Brokers.
"If their own lender won't do it for them another lender will. When you consider the average standard variable rate is about 3.5 per cent - they're simply bad value," he said.
A Bank of Ireland customer paying a mortgage rate of 3.6 per cent on €250,000 over 20 years could save €95 per month or €1,367.50 per year with an Ulster Bank U First tracker at 2.85 per cent. This assumes a mortgage with an LTV of 60 per cent or less.
Brokers say that Bank of Ireland's mortgage loan rate of 3.6 per cent is "the worst in show" in the standard variable rate category. Brokers privately say that NIB's new tracker offering a margin of 0.79 for per cent above ECB rate is the best deal in the market for those borrowing 60 per cent or less. However, some believe that NIB's customer service levels need to improve.
Borrowers should be aware that most commission-based brokers will not steer them towards NIB because they don't receive any financial reward for this recommendation. However, mortgage brokers are hoping this will change in the next few months under Den Danske's stewardship and that NIB will open up to the broker market.
For loans with LTV's over 60 per cent, Ulster Bank's U First tracker rate of 3.05 per cent is considered one of the best trackers available. However, customers should know that there is a €9 charge per month to avail of a U First current account. This fee should be included in borrower's calculations.
Bank of Ireland's tracker for loans over €400,000 is also considered excellent value at 3 per cent or a margin of 1 point over the ECB rate.
The good news for larger borrowers is that most lenders compete very keenly for mortgages over €250,000. For example, providers will offer discounts of up to 0.20 of a percentage point below their standard variable rate for home loans of €250,000 or more.
Further discounting is also available for the intensively competitive €350,000 to €400,000 market.
One broking source said that strong applicants can negotiate a further 0.10 to 0.15 per cent off published mortgage rates. "Strong applicants with low borrowings and excellent repayment capacity can haggle", he said. "Given that the real competition has moved to 0.79 per cent above the ECB - it remains to be seen whether aggressive borrowers can squeeze that margin even further."
"First time buyers should be wary of the banks trying to sell them everything when they walk in the door," said Tice O'Sullivan, senior financial adviser with PrimaFinance.ie in Kerry.
This refers to the widespread practice of lenders trying to sell bolt-on insurance such as critical illness, income protection, house insurance and mortgage protection products - in addition to the mortgage loan to borrowers.
"First time buyers are particularly vulnerable as they are inexperienced. They don't always know they are entitled to shop around for these products. They're not obliged to buy if from their mortgage lender," said O'Sullivan.
Regular readers of the Sunday Business Post know that these policies are not highly rated by the Money pages. They are often unnecessary and expensive - particularly as most lenders are open to re-negotiated aspects of the loan if this becomes necessary.
Many workers are also unaware that their companies already have such protection schemes in place on their behalf - so check before signing up.
Remember too that most income protection policies pay out for about 12 months even though you may have been contributing to them for years.
Remember that lenders will often offer discounted home insurance deals to quality borrowers. For example, some customers can obtain their first year's home insurance free as a sweetener to taking out their mortgage with certain lenders. Some providers also offer discounts such as two months free mortgage protection cover.
The legal cost of switching are now relatively negligble. Many banks and brokers will pay minimal costs such as land registry fees and property valuations. O'Sulllivan of PrimaFinance estimates the average cost to be about €330 to €380.
Borrowers should think of all elements of the transaction. It's not solely about the cheapest mortgage. You also need to ensure you are getting the "best-buy" experience by NOT purchasing certain products which can increase your total mortgage repayment package by tens of thousands of euro over a 20 to 30-year term.