AIB has announced that it will apply an immediate 0.5% increase for fixed mortgage rates.
The bank has confirmed that the new change does not affect those customers who are already on a fixed rate or those on a variable rate, only affecting new customers and those switching.
The new rates will take effect from close of business today and will apply to AIB, EBS and Haven mortgages. It means that new homeowners may have to fork out an additional €300 a year due to the hike in rates.
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Meanwhile, customers who are currently in the process of securing a mortgage will have before November 14 will be able to avail of the old fixed rates. the increase will see a monthly repayment on a new €100,000 AIB five-year green fixed rate mortgage with a loan to value of 50-80% over a 25 year term rise from €431.01 to €455.91.
The increases move the rates on AIB’s five-year fixed product, for example, for new mortgages with a loan-to-value (LTV) of 50 to 80% cent to 2.95%, while its 10-year loans, under the same LTV, move to 3.7 per cent. The cheapest fixed-rate across the AIB group is the 2.5% rate that applies to Haven’s four-year green mortgages, open to owners or buyers of homes with an energy rating of B3 or higher.
AIB tracker customers have already had the 1.25% in increases announced by the European Central Bank passed on to them, as required under their contracts. In a statement, AIB said: "These changes will not affect any of the bank’s variable or tracker mortgage rates while existing fixed mortgage rates are also not affected.
“More than half of our mortgage customers are already on a fixed-rate mortgage. As sustainability is a priority for AIB, we continue to offer lower green mortgage fixed rates to customers buying homes with an energy rating of B3 or higher," they added.
It follows as AIB is the first of the five main retail banks here to hike its fixed or variable rates since the ECB rate increases by 1.25% since July. In addition the bank also signaled an increase in a deposit rate, after offering low or no returns on savings over the past number of years.
Trevor Grant, Chairperson of the Association of Irish Mortgage Advisors reacted to the change by saying: "It is good to see that AIB, EBS and Haven are allowing applicants who have been loan approved up to 4 weeks to close out on the mortgage they have applied for. This decision is welcome and follows extensive lobbying from mortgage brokers throughout the country when Finance Ireland initially chose not to offer such notice.
"This will enable hundreds of mortgage applicants to close on their new homes or secure a much sought-after mortgage switching deal. Moves by lenders to introduce rate increases are to be expected and understandable with the ECB increasing their rates.
He added: "Following increases totalling 1.25% from the ECB, this 0.5% increase isn’t as bad as could have been expected and will act as the another push that many mortgage holders needed to reassess their current mortgage terms, appreciate huge difference in mortgage deals and look for better value with their own lender or, more likely, with another lender."
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