Room to improve: a review of switching activity in the Irish mortgage market

Shane Byrne, Kenneth Devine and Yvonne McCarthy

No 12/EL/20, Economic Letters from Central Bank of Ireland

Abstract: In this Letter, we provide a detailed review of switching in the Irish mortgage market and identify the potential for savings among mortgage holders. Our estimates show that three in every five ‘eligible’ mortgages for principal dwelling homes stand to save over €1,000 within the first year if they switch, and more than €10,000 over their remaining term. We find that just 2.9 per cent of mortgages switched provider during H2 2019. Our analysis points to a range of explanations for mortgage switching inertia. A significant proportion of mortgage holders report a lack of knowledge or worry about the prospect of switching, in addition, gender, education, financial literacy and behavioural characteristics can help explain the degree of reported inhibition towards switching. This highlights the relevance of behavioural insights in informing consumer policy design.

Date: 2020-10
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