AIB has announced  cuts to its variable and fixed mortgage rates. They include a 25 basis points reduction in the lender’s  standard variable rate, the fifth rate reduction for existing customers in three years.

The bank says that borrowers will see an annual repayment saving of €315 on a €200,000 mortgage over 25 years.

AIB has also introduced a seven-year fixed term rate of 3.50% and there’s a 50 basis points reduction on the five-year fixed rate to 3.30%. Fixed rate changes will come into effect from September 18, while standard variable rates and loan-to-value changes will apply from November 1.

Robert Mulhall, AIB’s managing director of retail and commercial banking in Ireland, said the improvements in variable rate offerings would benefit more than 100,000 customers.

Fianna Fáil’s finance spokesman Michael McGrath commented. “This announcement will hopefully force other lenders in the Irish market to follow suit. The onus now is on Bank of Ireland, Ulster Bank, Permanent TSB and KBC to introduce further rate cuts if they don’t want to lose market share. In my view, banks should be forced to compete on rates rather than ‘cash back’ gimmicks that customers end up paying back several times over in the long run, due to higher interest rates.”

McGrath added that there is a significant move in the Irish mortgage market towards fixed mortgage rates. “This provides certainty for both the lender and the borrower and I would hope the market will move to provide even better long-term fixed rates for customers,” he said.

Summary of AIB mortgage rate changes