AIB has announced significant reductions in both deposit and mortgage rates, aiming to provide better value for its customers amidst a competitive market. This move comes in response to recent rate cuts from the European Central Bank (ECB) and is part of AIB’s strategy to support customers during a period of fluctuating interest rates.
AIB’s Managing Director of Retail Banking, Geraldine Casey, stated that the bank is taking a balanced and measured approach to interest rate changes. The bank will reduce the interest on its one and two-year Fixed Term Deposit accounts by 0.25% and 0.5% respectively, effective from 13 May 2025. All other savings and deposit rates will remain unchanged. This marks the second cut to deposit rates this year, following a previous reduction in January.
In addition to deposit rate cuts, AIB will also reduce its fixed-rate mortgages by up to 0.75% for new and existing customers of AIB, EBS, and Haven. The two-year fixed rate for mortgages will decrease by 0.75%, while all other fixed-rate mortgages will see a reduction of 0.50%, excluding the High Value four-year fixed rate. These changes will also take effect from 13 May 2025.
The reductions are expected to benefit a large number of customers, particularly those whose homes do not have a Building Energy Rating (BER) of B3 or higher. For example, a new €300,000 AIB two-year fixed-rate mortgage with a loan-to-value (LTV) of 50-80% over a 25-year term will see monthly repayments drop from €1,682.35 to €1,557.37. This represents a saving of €124.98 per month, €1,499.76 per year, or €5,177.47 over the 25-year term.
Geraldine Casey highlighted that these reductions, along with previously announced cuts to green mortgage rates and competitive variable rates, demonstrate AIB’s commitment to supporting customers and providing them with the best value on their home-buying journey. She acknowledged that some customers are buying homes in areas where green properties are limited and that others are coming to the end of a previous fixed-rate mortgage taken out when interest rates were lower.
Despite these positive changes, experts believe AIB still has a long way to go to compete effectively in the market. Martina Hennessy, Managing Director of broker Doddl.ie, noted that while the rate cuts are a step in the right direction, there are still significant savings to be made for those looking to switch their mortgage. She pointed out that AIB’s non-green rate offerings have been higher than those of competitors, and the bank’s latest move is a response to this disparity.
AIB’s latest rate cuts follow a series of reductions by other major lenders, including Bank of Ireland, PTSB, and Avant Money. The competition in the mortgage market has intensified, with banks vying to offer the most attractive rates to customers. AIB’s decision to cut rates is seen as an effort to retain existing customers and attract new ones amidst this competitive landscape.
In addition to mortgage rate cuts, AIB has also extended its approval in principle period from six to twelve months, giving customers more time to find and buy their new homes. This extension is expected to provide greater flexibility and convenience for homebuyers.
