The largest lender in the State is increasing all its fixed rates by 0.50% with more hikes likely over the coming months.
AIB has become the first of the main lenders in Ireland to hike its mortgage rates after the ECB raised rates by 1.25% over the past few months.
The move follows recent rate hikes from smaller lenders such as ICS Mortgages and Finance Ireland.
What's changing?
AIB is increasing all its fixed rates by 0.50% for new mortgage customers from the end of today.
Fixed rates at AIB's subsidiaries EBS and Haven will also increase by the same amount.
So for example AIB's popular five-year fixed rate for first-time buyers will go up from 2.55% to 3.05%. And its cheapest rate (a four-year rate for those borrowing at least €250,000 for a home with a BER of B3 or better and who have a 50% deposit) will go from 2.10% to 2.60%.
However, for the moment, AIB, EBS and Haven's variable rates will all remain unchanged.
Existing fixed-rate customers also won't see any change to their rates, for now at least. However when they come to the end of their current fixed-rate agreement they'll be faced with higher rate options.
AIB's tracker customers aren't affected by today's news either - but they've already had the 1.25% in increases announced by the ECB passed on to them, as required under their contracts.
| New AIB fixed rates |
LTV >80% |
50% - 80% |
<50% |
|
1-2 Years |
3.65% |
3.55% |
3.45% |
|
3 Years |
3.05% |
2.95% |
2.85% |
|
4 Years |
3.35% |
3.25% |
3.15% |
|
5 Years |
3.05% |
2.95% |
2.85% |
|
7 Years |
3.65% |
3.55% |
3.45% |
|
10 Years |
3.80% |
3.70% |
3.60% |
|
Green Mortgage (5-Year Fixed) |
2.75% |
2.65% |
2.60% |
|
High Value (4-Year Fixed) |
2.80% |
2.70% |
2.65% |
I'm in the middle of applying for a mortgage?
If you're in the middle of applying for a mortgage with any of the lenders, you still have time.
Customers who have already submitted an application have until 14th November to draw down their mortgage and avail of the old fixed rates. Switchers also have until this date to avail of the cheaper rates. However if you draw down your mortgage after this date, the new rates will apply.
And if you start your application after 14th October, the higher rates will apply regardless of when you draw down your loan.
What will it cost?
How much the rate change affects you will depend on the size of the loan you're taking out and the term.
However a first-time buyer borrowing €300,000 over 30 years will now pay around €75 to €80 extra a month.
And if you were switching your mortgage to AIB and had €200,000 and 20 years remaining, you'll pay around €45 to €50 extra a month.
Expected news
Today's news was expected given recent moves by the ECB, which has raised rates twice to 1.25% since July in a bid to combat soaring inflation.
Unfortunately the ECB is expected to increase rates by another 0.75% to 2% at the end of the month.
And markets are forecasting that the ECB will hike rates to 3% or 3.25% in early 2023.
So more rises from AIB are almost a given, unfortunately, and BOI and PTSB will likely follow suit with their first increases over the coming days.
Indeed, by the start of next year, it's likely that all the ECB rate increases will have added over €2,000 a year to the average mortgage payment, which is similar to the recent energy price hikes that we've seen.
New deposit account
In slightly better news, at end of November AIB plans to launch a new 1-year fixed-term deposit product which will pay 0.25% interest for customers with a deposit balance of more than €15,000.
With inflation currently at over 8%, this isn't much to shout about but it means our short-lived experience with negative interest rates is a thing of the past.
