AIB reduce rates on green mortgages

Meanwhile, PTSB announced last month that it will reduce its rate for new customers by 0.30% on its four-year fixed-term mortgages, making the lender more attractive to first-time buyers in a volatile housing market. Picture Denis Minihane.

AIB has cut its interest rate on so called 'green mortgages' across all its brands including EBS and Green Haven.

The lender will reduce green mortgage fixed rates by 0.2% from April 9, and the new rate will be available to both new and existing customers.

Mortgage customers who own a home with an energy rating of B3 or higher can apply for this product.

The bank said the new rate will shave off €387.36 on annual mortgage repayments. This applies to customers on a new €300,000 five year green fixed rate mortgage with a loan to value of 50-80% over a 25 year term.

However, green mortgages still make up a smaller portion of the lenders loan book.

Meanwhile, PTSB last month announced changes to its green mortgage customers who are purchasing a house with a building energy rating certificate (BER) of A1 to B3. Green mortgage customers accounted for 30% of the bank’s total new mortgage lending last year.

PTSB introduced a new three-year fixed rate for new green mortgage customers with rates from 3.80% to 4.35% depending on the mortgage amount and the loan to value of the mortgage, while 2% cashback at drawdown is required on the full amount of a mortgage advanced.

However, PTSB also reduced rates for new customers by 0.30% on its four-year fixed-term mortgages, making the lender more attractive to first-time buyers in a volatile housing market.

The new four-year fixed rates are priced at 3.80%, 3.90% or 4.05% depending on the loan to value of the mortgage.

The lender estimated that the reduction will save mortgage holders up to €44 per month for a customer fixing a mortgage of €250,000 over a 30-year term.

This is the second reduction to the bank’s 4-year fixed rate since December when a reduction of 0.40% was passed on. However, PTSB also hiked variable rates at the time.

The European Central Bank will meet on Thursday to discuss monetary policy further and a roadmap for expected interest rate reductions this year.

Market experts are betting on the ECB cutting interest rates by June, which will give immediate relief to tracker mortgage customers however “the future is cloudier” for fixed and variable mortgage holders, according to broker and managing director at Mortgage Line Stephen Hamilton.

“Mortgages coming off fixed rates soon will, in the main, see a jump in mortgage repayments,” he said.