AIB Cuts Mortgage Rates Again Amidst Hopes of a Price War

AIB has announced another round of mortgage rate cuts, marking the third reduction this year. This move is expected to ignite a mortgage price war among lenders, potentially benefiting new buyers and those coming off fixed rates.

The bank is reducing its five-year green mortgage rate by 0.25 percentage points, bringing it down to 3.2% for properties with a Building Energy Rating (BER) of B3 or higher. Additionally, AIB is cutting its four-year fixed rate for mortgages of €250,000 and above by 0.25 points, making it available from 3.7%. These new rates will be available to both new and existing customers starting tomorrow.

AIB’s Managing Director of Retail Banking, Geraldine Casey, emphasised the importance of offering a variety of choices, value, and convenience for customers seeking to buy their new home. She noted that this latest cut aligns with AIB’s strategy to support customers in making more sustainable choices.

The rate reductions come in the wake of the European Central Bank’s (ECB) recent decision to lower its key lending rates for the second time this year. This has prompted other lenders, including Bank of Ireland, PTSB, and Avant Money, to also reduce their rates.

Broker Michael Dowling of Dowling Financial welcomed the rate cuts, highlighting that the reduction on AIB’s green rate will save borrowers approximately €13 a month for every €100,000 borrowed. AIB has also extended its approval in principle period from six to 12 months, giving customers more time to find and buy their new home.

The latest cuts are part of AIB’s broader strategy to remain competitive in the market. Martina Hennessy, Managing Director of broker Doddl.ie, pointed out that AIB’s non-green rate offerings had become higher than those of competitors, prompting the bank to make these reductions. She added that the cuts could save customers around €500 a year.

AIB’s latest rate cuts are seen as a positive development for the mortgage market, potentially leading to further reductions from other lenders and providing significant savings for borrowers.