IDEAS home Printed from https://ideas.repec.org/p/cbi/ecolet/08-el-15.html
   My bibliography  Save this paper

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
    as

    Download full text from publisher

    File URL: https://centralbank.ie/docs/default-source/publications/economic-letters/economic-letter---vol-2015-no-8.pdf?sfvrsn=10
    Download Restriction: no
    ---><---

    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.
    2. 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.
    3. Bucks, Brian & Pence, Karen, 2008. "Do borrowers know their mortgage terms?," Journal of Urban Economics, Elsevier, vol. 64(2), pages 218-233, September.
    4. 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.
    5. Samuelson, William & Zeckhauser, Richard, 1988. "Status Quo Bias in Decision Making," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 7-59, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Devine, Kenneth, 2022. "Refinancing Inertia in the Irish Mortgage Market," Research Technical Papers 5/RT/22, Central Bank of Ireland.
    2. Kelly, Jane & Myers, Samantha, 2019. "Fixed-rate mortgages: building resilience or generating risk?," Financial Stability Notes 5/FS/19, Central Bank of Ireland.
    3. Scott, David & Pratap Singh, Anuj, 2024. "Mortgage switching through the turning of the interest rate cycle," Financial Stability Notes 2/FS/24, Central Bank of Ireland.
    4. 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).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Keys, Benjamin J. & Pope, Devin G. & Pope, Jaren C., 2016. "Failure to refinance," Journal of Financial Economics, Elsevier, vol. 122(3), pages 482-499.
    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. Brunetti, M. & Ciciretti, R. & Djordjevic, Lj., 2020. "Till mortgage do us part: Mortgage switching costs and household's bank switching," Journal of Banking & Finance, Elsevier, vol. 119(C).
    4. Lunn, Pete & McGowan, Féidhlim & Howard, Noel, 2018. "Do some financial product features negatively affect consumer decisions? a review of evidence," Research Series, Economic and Social Research Institute (ESRI), number RS78.
    5. Paulo Pereira Silva & Victor Mendes, 2023. "Education and financial mistakes: The case of avoidable trading fees in stock markets," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 22(2), pages 173-202, May.
    6. John Y. Campbell, 2016. "Restoring Rational Choice: The Challenge of Consumer Financial Regulation," American Economic Review, American Economic Association, vol. 106(5), pages 1-30, May.
    7. Begley, Jaclene & Chan, Sewin, 2018. "The effect of housing wealth shocks on work and retirement decisions," Regional Science and Urban Economics, Elsevier, vol. 73(C), pages 180-195.
    8. Malmendier, Ulrike M. & Botsch, Matthew J., 2020. "The Long Shadows of the Great Inflation: Evidence from Residential Mortgages," CEPR Discussion Papers 14934, C.E.P.R. Discussion Papers.
    9. Djordjevic, Ljubica, 2015. "Essays in household finance," Other publications TiSEM ad3edc86-915e-4ce8-ba38-b, Tilburg University, School of Economics and Management.
    10. Adams, Paul & Hunt, Stefan & Palmer, Christopher & Zaliauskas, Redis, 2021. "Testing the effectiveness of consumer financial disclosure: Experimental evidence from savings accounts," Journal of Financial Economics, Elsevier, vol. 141(1), pages 122-147.
    11. Guiso, Luigi & Pozzi, Andrea & Tsoy, Anton & Gambacorta, Leonardo & Mistrulli, Paolo Emilio, 2022. "The cost of steering in financial markets: Evidence from the mortgage market," Journal of Financial Economics, Elsevier, vol. 143(3), pages 1209-1226.
    12. Javier Villar Burke, 2016. "Stocks or flows? New thinking about monetary transmission through the lending channel," Working Papers 2016.04, International Network for Economic Research - INFER.
    13. Piazzesi, M. & Schneider, M., 2016. "Housing and Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1547-1640, Elsevier.
    14. Steve Sharpe & Shane Sherlund, 2016. "Crowding Out Effects of Refinancing on New Purchase Mortgages," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 48(2), pages 209-239, March.
    15. Santosh Anagol & Vimal Balasubramaniam & Tarun Ramadorai, 2018. "Endowment Effects in the Field: Evidence from India’s IPO Lotteries," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(4), pages 1971-2004.
    16. Brice Corgnet & Mark Desantis & David Porter, 2018. "What Makes a Good Trader? On the Role of Intuition and Reflection on Trader Performance," Journal of Finance, American Finance Association, vol. 73(3), pages 1113-1137, June.
    17. Benjamin J. Keys & Tomasz Piskorski & Amit Seru & Vincent Yao, 2014. "Mortgage Rates, Household Balance Sheets, and the Real Economy," NBER Working Papers 20561, National Bureau of Economic Research, Inc.
    18. Beltratti, Andrea & Benetton, Matteo & Gavazza, Alessandro, 2017. "The role of prepayment penalties in mortgage loans," Journal of Banking & Finance, Elsevier, vol. 82(C), pages 165-179.
    19. Yiyi Bai & Zhisheng Li & Huan Liu, 2019. "Financial outreach and household financial constraint," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(5), pages 1503-1523, March.
    20. Tyran, Jean-Robert & Thomas, Thomas, 2016. "Money Illusion and Household Finance," CEPR Discussion Papers 11643, C.E.P.R. Discussion Papers.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cbi:ecolet:08/el/15. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Fiona Farrelly (email available below). General contact details of provider: https://edirc.repec.org/data/cbigvie.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.