AIB cuts interest rates on four-year fixed-rate mortgages 

The new rates will be available immediately for new and existing customers

AIB managing director of retail banking Geraldine Casey: 'We continue to monitor the mortgage market and the needs of customers, making considered adjustments where appropriate.'

AIB has announced a cut to its four-year fixed-rate mortgages, which are valued at over €250,000, that could save customers potentially over €600 a year.

The move comes in spite of recent interest rate hikes from the European Central Bank (ECB).

According to the bank, there will be a reduction of up to 0.35% on its four-year fixed rates for mortgages over €250,000, to between 3.15% and 3.25%, which will be available immediately for new and existing customers.

Figures provided by AIB show that a monthly repayment on a new €350,000 AIB High Value four-year fixed-rate mortgage, with a loan to value of 50% to 80% over a 25-year term will be €1,695.30.

“The previous monthly repayment would have been €1,750.82, representing a saving of €55.52 per month, €666.24 a year, or €4,715.72 over the 25-year term,” said the bank.

The rate varies on the loan to value percentage. A mortgage with a loan to value of equal to or below 50% will have an interest rate of 3.15%, down from 3.4%, while a mortgage with a loan to value over 50% but equal to or below 80% will result in an interest rate of 3.20%, down from 3.5%.

Mortgages with a loan to value rate of greater than 80% will see the rate drop from 3.6% to 3.25%.

According to the Banking and Payments Federation Ireland, the average mortgage approval during August was valued at just over €330,000. For first-time buyers, it was a little higher at over €333,000.

AIB managing director of retail banking Geraldine Casey said: “With this fixed rate reduction AIB continues to offer value and security for our customers… We are committed to pricing our mortgages at a sustainable rate for our customers and the bank.

"And we continue to monitor the mortgage market and the needs of customers, making considered adjustments where appropriate.” 

This rate cut from AIB comes as the ECB continues to increase interest rates in a bid to bring down inflation which is currently running at 3.8% across the eurozone — well ahead of the 2% medium-term target.

The ECB are due to meet again at the end of this month to discuss another potential interest rate hike. At least one more interest rate hike is expected before the end of the year.

According to data from the Central Bank of Ireland, the weighted average interest rate on new Irish mortgages during August was 3.53% compared to the eurozone average of 3.62%.