Move will help bank attract customers buying second-hand homes with lower energy ratings
It is reducing its non-green mortgage fixed rates by up to 0.75 percentage points from May 13, but they still remain some of the most expensive in the market.
The lower rates apply to its subsidiaries EBS and Haven as well.
The move comes after the European Central Bank (ECB) announced its seventh cut in its rates last month.
The new AIB rates will apply to new customers and those coming off fixed rates only, and not to those on existing fixed rates.
AIB is also reducing the interest it pays on two of its fixed-term deposit accounts by up to 0.5 percentage points.
The one- and two-year Fixed Term Deposit accounts will reduce by 0.25 points and 0.5 points respectively, effective from May 13.
All other savings and deposit rates remain unchanged.
Up to now, much of AIB Group’s mortgage rate cuts have been for those with houses with high energy ratings.
The latest cuts will help the banking group compete for those buying second-hand homes with lower building energy ratings (BER) and its own customers coming off fixed rates that they locked into at lower rates than are being offered at the moment.
Borrowers should be aware there are much better fixed rates, with rates of one percentage point or cheaper available
Lowering non-green fixed rates should stop some of those people switching to other lenders, such as Avant Money.
AIB’s two-year fixed rate for non-green mortgages will reduce by 0.75 points.
All other non-green fixed-rate mortgages will reduce by 0.5 points, excluding the bank’s Higher Value 4-Year Fixed Rate.
AIB said monthly repayments on a new €300,000 AIB two-year fixed-rate mortgage, with a loan-to-value of 50pc to 80pc, over a 25-year term, will be €1,557.
The previous monthly repayment would have been €1,682, representing a saving of €125 a month.
Over a year, this works out at a saving of almost €1,500 over the 25-year mortgage term.
Mortgage broker Michael Dowling said the AIB Group was reacting to market pressure in moving to reduce its fixed-rate offering for non-green mortgage customers.
He welcomed the cuts, but said borrowers should be aware there are much better fixed rates available in the market, with rates of one percentage point or cheaper available.
AIB’s four-year fixed rate of 4.35pc compares unfavourably with Bank of Ireland’s four-year fixed rate offering of 3.2pc.
He said AIB Group is the best value on green mortgage rates, but Bank of Ireland, PTSB and Avant Money have better non-green rates.
“AIB has a long way to go to compete in the fixed-rate market for non-green customers,” Mr Dowling said.
The European Central Bank is expected to cut its rates again next month, with other cuts likely as a weaker dollar against the euro is likely to subdue inflation.
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