Tens of thousands of home owners have been handed a little respite after one of the country’s biggest mortgage lenders cut its rates.
Finance Mi nister Michael Noonan said Allied Irish Bank’s 0.25% reduction was a mark of the increasing competition among banks.
The revised rates kick in on July 1 for new and existing customers and are worth about 320 euros to someone who borrowed 200,000 euros over 25 years.
“I welcome the move by AIB today to reduce mortgage interest rates again for new and existing customers,” he said.
“Today’s move is illustrative of the increasingly competitive mortgage market we now have in Ireland, which is a priority for this Government and this latest move along with the previous rate reductions from AIB benefits approximately 76,000 mortgage accounts leading to very significant annual savings for households across the country.”
AIB, which is 99% owned by the state and being lined up for a partial sell-off this year or next, said its s tandard variable rate would now be 3.4% and its new l oan-to-value variable rates would start from 3.1%.
About 76,000 mortgage holders will benefit to some degree from the new rates.
The bank said it was its fourth reduction in 18 months and it has offered customers combined savings of 1,300 euros in a year.
Robert Mulhall, AIB’s managing director of retail, business and corporate banking, said: “When we started reducing rates in late 2014 we committed that as AIB’s financial performance and funding conditions continued to improve, we would keep key rates under review.
“We are now in a position to pass on a further rate reduction to our customers.”
He added: “Our mortgage offerings will continue to evolve and we will be introducing more new features across our other brands over the coming months to further benefit customers and to give them the choices they are looking for.
AIB is also offering 2,000 euros for professional fees for customers switching to it.
Mr Noonan also urged people to shop around for better deals.
I further welcome the bank’s initiative to stimulate activity in the switcher market and I urge mortgage customers to continue to shop around to avail of the best rate.”
AIB said the new rates would be worth 306 euros a year on a 200,000-euro mortgage over 20 years; 320 euros for the 25-year loan; 333 euros for the 30-year loan; and 345 euros for the 35-year mortgage.