AIB to increase its fixed-rate mortgages by 0.5%

AIB said more than half of their mortgage customers are already on a fixed-rate mortgage.

AIB said it will increase its fixed-rate mortgage products by 0.5% across its AIB, EBS and Haven brands.

The move follows the European Central Bank’s recent decisions to raise interest rates by 1.25% since July and the wider rising interest rate environment.

The move was not unexpected but the increase was AIB's first in more than a decade. Similar rate increases are expected from other Irish banks in the coming weeks.

These changes will not affect any of the bank’s variable or tracker mortgage rates while existing fixed mortgage rates are also not affected. 

The new rates are effective from the close of business today. However, customers who draw down a new mortgage by November 14 can avail of the previous fixed rates.

AIB has until now only passed on the ECB interest rate increases to tracker mortgage customers as the bank is contractually obliged to do.

AIB said more than half of their mortgage customers are already on a fixed-rate mortgage. The new rates apply to all private dwelling home and buy-to-let new fixed-rate mortgages.

The change would mean a monthly repayment on a new €100,000 AIB five-year green fixed rate mortgage with a loan to value of 50% to 80% over a 25-year term will be €455.91. The previous monthly repayment would have been €431.01.

Trevor Grant, Chairperson of the Association of Irish Mortgage Advisors said they welcomed the one-month period allowing those already approved for mortgages to draw them down and avail of the previous rate.

"Moves by lenders to introduce rate increases are to be expected and understandable with the ECB increasing their rates," he said.

"Following increases totalling 1.25% from the ECB, this 0.5% increase isn’t as bad as could have been expected and will act as another push that many mortgage holders needed to reassess their current mortgage terms."

AIB has the largest market share for residential mortgages in Ireland followed by Bank of Ireland and Permanent TSB.

When contacted by the Irish Examiner, both Bank of Ireland and Permanent TSB said no immediate announcements on their rates were expected but their interest rates remain under review.