AIB raises all fixed-rate mortgage rates, costing homeowners up to €300 more per year

AIB is the first of the big three banks to raise mortgage rates in the wake of interest rate hikes in Europe.

The bank is raising all of its new fixed rates by 0.5 percent immediately, but those in the process of securing a mortgage have four weeks to cut rates before the increases take effect.

The higher fixed rates apply to the AIB, EBS and Haven brands and add €300 per year to the repayment costs for some fixed rates.

But the banking group is not unexpectedly increasing its variable interest rates.

Existing fixed and adjustable rate mortgages will be unaffected by the increase, the bank said.

The new higher interest rates for those looking to take out a home-buying mortgage and for those switching home do not apply until November 14.

This gives those people in the process of securing a mortgage four weeks to reach the claim stage before the new rates take effect.

This is in contrast to Finance Ireland, which announced higher lending rates effective immediately for those who had not applied for borrowing prior to the rate hike announcement.

Existing fixed-rate mortgage rates are also unaffected

AIB said the hikes were in response to decisions by the European Central Bank (ECB) to raise interest rates by 1.25 percentage points since July.

The bank said: “These changes will not affect the bank’s variable or tracker mortgage rates, while existing fixed mortgage rates will also be unaffected. More than half of our mortgage customers already have a fixed-rate mortgage.”

AIB has only passed interest rate increases to tracker mortgage customers, which the bank is contractually obligated to do.

AIB said the monthly repayment for a new five-year €100,000 fixed-rate AIB green mortgage with a 50 percent to 80 percent loan-to-value ratio over 25 years will be €455.91.

The previous monthly repayment would have been €431. Over a year this makes an additional repayment of €300.

Broker Michael Dowling said the increases will raise the cost of all fixed rates by €25 a month for every €100,000.

He urged existing AIB Group fixed-rate customers to stick to the existing fixed rates ahead of Friday’s close of business.

The bank is also launching a new one-year term deposit product for savers.

It has a rate of 0.25 percent and will be available to customers with a deposit balance of more than €15,000 from the end of November.

Non-bank lenders have already hiked rates this year, some multiple times.

People whose mortgages were sold by the banks and who are now controlled by the likes of Pepper have seen a rise in tracker and variable rates.

Pepper manages 60,000 mortgages that banks have sold to vultures, but these borrowers are unable to set their interest rates once their mortgage has been sold.

Non-bank lender ICS Mortgages has raised its lending rates three times this year, with Finance Ireland’s rates rising twice by up to 2 percentage points in the last step. Avant Money has hiked interest rates twice. AIB raises all fixed-rate mortgage rates, costing homeowners up to €300 more per year

Fry Electronics Team

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