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Mortgages

AIB cuts mortgage rates by 0.30% amid full-on price war

AIB cuts mortgage rates by 0.30% amid full-on price war
Rob Flynn

Rob Flynn

Staff Writer

The battle for the Irish mortgage market has once again flared up as AIB responds with a suite of new rate reductions across its fixed-rate and green mortgage offerings.

The rate war in the Irish mortgage market is now in full swing as AIB today struck a blow to competitors, announcing a number of rate reductions across its fixed-rate offerings.

The news will be a boon for Irish consumers who will inevitably benefit from the increased competition in the market. But what has changed?

Here’s what you need to know.

Rate reductions

AIB, Ireland’s largest mortgage provider is cutting its three-year and five-year fixed rates from 2.85% to 2.55% - a rate reduction of 0.30%.

This is AIB’s second mortgage rate reduction in less than 12 months and is a clear message to the other competitors in the market who have also significantly reduced their rates.

As well as the above the bank is also reducing its Green five-year fixed rate from 2.50% to 2.45% - a reduction of 0.05%. This is welcome news for those energy-conscious buyers looking to secure a competitive rate on purchasing an energy-efficient home.

That means that customers currently on a variable rate of 3.15% who switch to a Green five-year fixed rate of 2.45%, will see a reduction of €96 in their monthly mortgage repayments, or €1,152 per annum, based on a mortgage of €270,000 over 25 years.

Nevertheless, keeping things in perspective, despite today's announcement and recent mortgage rate reductions from the likes of KBC and Ulster Bank, mortgage customers in Ireland are still paying some of the highest rates in the Eurozone according to the Central Bank. The average rate on a new mortgage issued here in November was 2.90% - way above the 1.37% average in Europe!

Unsure whether to go fixed or variable? See here for more info on the pros and cons of fixed versus variable rates.  

New digital mortgage offering

As part of the latest suite of rate reductions from AIB, the bank has also announced the introduction of Ireland’s first end-to-end online digital mortgage offering for customers.

This is truly a first in the Irish mortgage market, where first time-buyers and movers will be able to complete almost their entire mortgage journey online, cutting out time and money for cash-strapped buyers.

The online service will allow customers to:

  • Calculate their borrowing capacity
  • Complete an application in minutes
  • Upload documents 
  • Secure approval online
  • Drawdown their mortgage

Commenting on today's announcement, Tom Kinsella, Head of Homes and Consumer at AIB said: “As Ireland’s most digitally enabled bank we are committed to continually improving our offering for customers so we have introduced Ireland’s first end-to-end online mortgage application to make the journey easier and more transparent. This convenience, coupled with over 200 home advisors located around the country, provides our customers with the support they need to purchase their home. We want to give our customers the fairest possible mortgage, real choice and an enhanced customer experience.”

If that wasn’t enough, AIB’s mortgage website has undergone a complete overhaul, and has been optimised for mobile, making seeking information in regards to mortgages so much simpler.

When are the new rates available?

The revised fixed rates from AIB will come into effect from 24th February 2020 for all new customers and existing variable rate customers who wish to opt for a fixed rate. If an existing customer is already on a fixed rate and wants to avail of the new rates an early repayment charge may apply.

Are the rates competitive?

The new rates from AIB are highly competitive, however, they are still slightly higher than rivals KBC and Ulster Bank, whose lowest fixed rates currently stand at 2.25% and 2.20% respectively.

Worth noting for first-time buyers, movers or switchers is that if you choose to pay off your AIB mortgage using an AIB current account you will receive free day-to-day banking.

People who switch mortgage to AIB will also receive €2,000 cashback. 

What are AIB’s mortgage rates?

Here’s a selection of some of AIB’s most competitive rates:

Type

New rate

Reduction

3-year fixed

2.55%

-0.30%

4-year fixed

2.85%

No change

5-year fixed

2.55%

-0.30%

5-year fixed Green

2.45%

-0.05%

10-year fixed

3.30%

No change

Remember to always compare

Although the new rates from AIB might seem competitive, make sure you're getting the best deal to suit your needs.

Always compare all rates across all lenders on bonkers.ie before you commit with our free and easy-to-use mortgage calculator.

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