One client who talked with The Journal began the switching process with his broker in July of this year but has still not had a loan offer from the new lender. Currently on a fixed rate, he and his wife want to switch to another four-year fixed rate.
To be honest, it appears as though they may be waiting so they can increase the rates, he added. "We're anxious about the rates increasing, which is why we're trying to have this locked in as quickly as possible.
"All of our budgeting at the present is based on being able to stay on a fixed rate for the next several years, so if our rate ends up climbing to 4%, that's going to be a huge increase in our monthly outgoings.
"This isn't a dangerous loan for the bank, I was assured; it's 1.5 times our wages, which, in the broad scheme of things, is nothing for a bank,"
Due to the lender's delay in processing applications, he and his wife have been asked to produce new bank statements and paystubs on numerous occasions since their initial application.
"Even though the reason we were submitting additional documentation was because they had let the time to pass without making us an offer, we were dropped to the back of the line once more. It's very annoying," he said.
The Association of Irish Mortgage Advisors (AIMA), which represents brokers, is chaired by Trevor Grant, who claimed that his own brokerage is experiencing the effects of the delays "on a daily basis."
"Up until about a year ago, despite the fact that switching mortgages made a lot of sense, typically people just didn't do it," he added.
"Over the past year, there has been a significant increase in the number of individuals, and there is clearly a lot of conversation about interest rates. People are more aware of it, and they are quite afraid that their mortgage rates would increase because it is their biggest financial commitment.
According to a survey from the Banking and Payments Federation Ireland (BPFI) in August, switching and top-up activity on non-purchase mortgages increased by 126.5% over the previous year.
The withdrawal of two large lenders, KBC and Ulster Bank, from the Irish market, according to Grant, is a significant role in the delays faced by clients trying to switch providers.
They were known for offering low-cost, fixed-rate solutions, so many switchers would have chosen them as their new home, and at their height, they were responsible for 25% of mortgages, he added. "Losing them and then experiencing that tremendous increase in applications as well has greatly slowed down the application process."
Although it has been beneficial for many organisations, especially those in the banking and financial industries, he claimed that the continued use of remote work has also led to "unnecessary delays."
Mortgages are by their very nature very paper-based and procedural-driven, thus the process has grown longer, he claimed.
If all of the customer's paperwork is in order, Grant said the approval process now takes five working days to up to 25 working days.
Even if you have delivered everything as it should be at this point, answering queries that keep coming in might take up to 20 or 25 days in some situations, he added. "If you have queries it can drag on forever. You get into a process of answering queries just for them to come back with more.
He noted that many lenders have been hiring more employees in order to better meet demand, but he expressed worry about the clients' potential tight deadlines for drawing down their mortgages in the event that a bank decides to raise interest rates.
He claimed that this had already occurred in the recent case of one lender, which had given consumers with active mortgage applications just five days to move on to the draw-down stage in order to maintain their initial lower rate.
According to Grant's analysis of broker comments, the majority of applicants were unable to reach this deadline and may now be subject to a reevaluation to determine whether they still qualify at the new rates based on affordability.
"They need to give individuals more time to close because it took them longer to get accepted in the first place, and most of the time, those delays are not the customers' fault," he said. "If they're approved, they should be given time so they can obtain the money at the rate promised."
In this country, getting a mortgage and purchasing a home is challenging. When the lender, who may be the only one ready to lend you the money, tells you that you no longer qualify after you have signed a contract and paid your deposit, it comes as a major shock.
He noted that because not all contracts contain a provision protecting the deposit, customers can in some situations lose it if their mortgage funding fails.
The Journal questioned many banks about the current processing times for mortgage switch applications from consumers.
According to Bank of Ireland, it complies with the Central Bank's Consumer Protection Code, which mandates that after consumers present the bank with all necessary paperwork and legal evidence, authorisation should be granted within 10 days.
The length of time between a customer's acceptance in principle and drawdown of the money, according to Permanent TSB, "depends on the specific circumstances of each customer, including whether the customer's valuer and solicitor have finished their work."
The bank reported that there are currently no problems with this step of the process. "Once all of these pieces are in place, offer and drawdown may be done fairly quickly," the bank added.
"We are presently strengthening the team to continue to satisfy the higher demand," the statement reads, "given a growth in the volume of switcher applications."
According to an AIB spokesman, the bank works closely with customers to get them through the process "as quickly as possible," although the turnaround times vary based on the circumstances of each case.
According to them, "certain customers may suffer delays inside our Haven broker channel due to extraordinary demand, and we are striving to bring this timeline in line." "We continually examine our resources with the goal of supporting both our current and prospective future clients.
Profit from switching
The Daft.ie real estate website's broker, Daftmortgages.ie, advised mortgage holders earlier this week not to let the alleged "trouble" of moving lenders deter them.
According to data from the website's customised savings reports, 87% of mortgage holders would save on their monthly payments if they switched mortgages right away, saving an average of €90.
According to the report, current mortgage holders will save an average of slightly over €8,900 by switching and fixing interest rates now over the course of the following four years.
In a survey by the website, 40% of mortgage holders stated that they haven't thought about transferring because of the work required to do so. A further 24% of mortgage consumers think that switching is prevented by having a fixed rate.
Customers who are currently on fixed rates, according to Paul Monahan, general manager of Daftmortgages.ie, should still inquire about a move.
Currently, most clients who terminate their fixed-rate mortgage are not assessed a break fee, he said.
"I would suggest any customer with a fixed rate mortgage to phone their lender and inquire about the cost of breaking; it's certainly free to do so. Almost all holders of fixed or variable rate mortgages will profit by switching to a new fixed rate now and locking in today's mortgage rates, which start at about 2%, because interest rates are rising.
