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Switch and Save in the Irish Mortgage Market?

Author

Listed:
  • Devine, Kenneth

    (Central Bank of Ireland)

  • Frost, Sarah

    (Central Bank of Ireland)

  • McElligott, Rory

    (Central Bank of Ireland)

Abstract

This letter examines the opportunities that exist for mortgage holders to switch between lenders. The sample of loans examined incorporates all mortgages for Principal Dwelling Homes (PDH) at the three Irish headquartered banks. We show that 21 per cent of loans studied have the potential to make savings. Despite this, switching activity is currently exceptionally low - this may be explained by a number of factors, primarily the non-financial costs of switching. Greater transparency surrounding mortgage products and the switching process would be welcome in the Irish mortgage market.

Suggested Citation

  • Devine, Kenneth & Frost, Sarah & McElligott, Rory, 2015. "Switch and Save in the Irish Mortgage Market?," Economic Letters 08/EL/15, Central Bank of Ireland.
    • Handle: RePEc:cbi:ecolet:08/el/15
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    File URL: https://centralbank.ie/docs/default-source/publications/economic-letters/economic-letter---vol-2015-no-8.pdf?sfvrsn=10
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    References listed on IDEAS

    as
    1. Gathergood, John & Weber, Jörg, 2017. "Financial literacy, present bias and alternative mortgage products," Journal of Banking & Finance, Elsevier, vol. 78(C), pages 58-83.
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    3. Andersen, Steffen & Campbell, John Y. & Meisner-Nielsen, Kasper & Ramadorai, Tarun, 2014. "Inattention and Inertia in Household Finance: Evidence from the Danish Mortgage Market," Scholarly Articles 17492179, Harvard University Department of Economics.
    4. Bucks, Brian & Pence, Karen, 2008. "Do borrowers know their mortgage terms?," Journal of Urban Economics, Elsevier, vol. 64(2), pages 218-233, September.
    5. Steffen Andersen & John Y. Campbell & Kasper Meisner Nielsen & Tarun Ramadorai, 2020. "Sources of Inaction in Household Finance: Evidence from the Danish Mortgage Market," American Economic Review, American Economic Association, vol. 110(10), pages 3184-3230, October.
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    Cited by:

    1. Devine, Kenneth, 2022. "Refinancing Inertia in the Irish Mortgage Market," Research Technical Papers 5/RT/22, Central Bank of Ireland.
    2. Timmons, Shane & Barjaková, Martina & McElvaney, Terry & Lunn, Pete, 2019. "Can official advice improve mortgage-holders’ perceptions of switching? An experimental investigation," Papers WP612, Economic and Social Research Institute (ESRI).
    3. Kelly, Jane & Myers, Samantha, 2019. "Fixed-rate mortgages: building resilience or generating risk?," Financial Stability Notes 5/FS/19, Central Bank of Ireland.

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