AIB announces 0.25% cut in mortgage rate + €2,000 for switchers

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Brendan Burgess

Brendan Burgess

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AIB reduces mortgage interest rates again for new and existing customers

· Reduction of 0.25% in AIB variable rates applies to all Owner Occupier and Buy to Let mortgages

· Introduction of a €2,000 contribution towards professional fees for all customers switching to AIB

· Standard Variable Rate (SVR) now 3.4%

· New Loan-to-Value (LTV) variable rates from 3.1%

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AIB today (Monday 9th May) announces a reduction of 0.25% in its SVR and LTV mortgage rates for owner occupier and buy to let customers. This is the fourth rate reduction in 18 months, lowering the SVR to 3.4%. The latest rates apply to new and existing customers with effect from 1st July, 2016. The SVR and LTV variable rate reductions will be supported by the introduction of a €2,000 contribution towards professional fees for all customers switching to AIB.



AIB’s Managing Director of Retail, Business and Corporate Banking, Robert Mulhall, 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. This is the fourth variable rate cut in a year and a half. During that period we have brought rates down by 1%, clearly demonstrating our commitment to keeping mortgage rates under constant review and passing on benefits when we can. Customers of other banks can materially benefit by moving their mortgage to AIB. To that end, we are introducing a new initiative that will enable their customers to avail of our great rates by contributing €2,000 to the professional costs associated with switching.



“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” he added.



The latest move benefits approx. 76,000 mortgage accounts, leading to very significant annual savings. As an example, owner occupier customers with a €200,000 mortgage on a 25 year term will save an additional €320 per annum following this announcement. The combined annual savings from the four reductions announced by AIB in the last 18 months is approx. €1,300.


Notes to Editors:

Revised variable rates come in to effect from 1st July 2016 for new and existing customers.

This reduction is not linked to the European Central Bank base interest rate and will therefore not apply to tracker mortgage holders.

There are no changes to AIB’s range of existing competitively priced fixed rates.

The revised rates apply to ‘Owner Occupier’ or ‘Primary Dwelling Home’ and ‘Buy to Let’ mortgages.

Impacted customers will be advised of the changes in writing.

The changes included in this announcement apply to AIB customers in the Republic of Ireland only.
 
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This is great news, however even now with a rate of 3.1% for LTV <=50%, I'll still be looking to move to Frank if they can offer 2.7% as rumoured.
I always wonder when I see a cut like this - "what do AIB know is coming around the corner that we don't."
 
The new political situation has changed things completely. Michael Noonan will no longer be able to protect the banks as he no longer has a Dáil majority.

The Central Bank has delayed approving Frank as long as they possibly could. They have probably run out of excuses for not authorising them.

So AIB is probably trying make the demand for legislation less pressing.

Brendan
 
Any idea on what the claw-back rules for the 2k professional fees contribution would be? Have they been announced?
 
It's interesting that AIB's SVR is now 3.4%, whereas it's 4.2% in the North.

Has anybody told Pearse Doherty?;)
 
I can't see this anywhere on their website, do you have a link to the announcement?

Thanks,
Phil


Brendan Burgess said:
AIB reduces mortgage interest rates again for new and existing customers

· Reduction of 0.25% in AIB variable rates applies to all Owner Occupier and Buy to Let mortgages

· Introduction of a €2,000 contribution towards professional fees for all customers switching to AIB

· Standard Variable Rate (SVR) now 3.4%

· New Loan-to-Value (LTV) variable rates from 3.1%

View attachment 1215


AIB today (Monday 9th May) announces a reduction of 0.25% in its SVR and LTV mortgage rates for owner occupier and buy to let customers. This is the fourth rate reduction in 18 months, lowering the SVR to 3.4%. The latest rates apply to new and existing customers with effect from 1st July, 2016. The SVR and LTV variable rate reductions will be supported by the introduction of a €2,000 contribution towards professional fees for all customers switching to AIB.



AIB’s Managing Director of Retail, Business and Corporate Banking, Robert Mulhall, 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. This is the fourth variable rate cut in a year and a half. During that period we have brought rates down by 1%, clearly demonstrating our commitment to keeping mortgage rates under constant review and passing on benefits when we can. Customers of other banks can materially benefit by moving their mortgage to AIB. To that end, we are introducing a new initiative that will enable their customers to avail of our great rates by contributing €2,000 to the professional costs associated with switching.



“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” he added.



The latest move benefits approx. 76,000 mortgage accounts, leading to very significant annual savings. As an example, owner occupier customers with a €200,000 mortgage on a 25 year term will save an additional €320 per annum following this announcement. The combined annual savings from the four reductions announced by AIB in the last 18 months is approx. €1,300.


Notes to Editors:

Revised variable rates come in to effect from 1st July 2016 for new and existing customers.

This reduction is not linked to the European Central Bank base interest rate and will therefore not apply to tracker mortgage holders.

There are no changes to AIB’s range of existing competitively priced fixed rates.

The revised rates apply to ‘Owner Occupier’ or ‘Primary Dwelling Home’ and ‘Buy to Let’ mortgages.

Impacted customers will be advised of the changes in writing.

The changes included in this announcement apply to AIB customers in the Republic of Ireland only.
Click to expand...
 
Good piece in the Irish Times from Fiona Reddan

Why AIB’s latest rate cut doesn’t go far enough

Move will benefit 50% fewer customers than last rate cut and the bank’s customers are still paying considerably more than European norms

Last August for example, AIB said that its SVR cut would benefit some 156,000 mortgage account holders. Today’s announcement however, which only applies to AIB, and not to its Haven and EBS subsidiaries, will help just 76,000 customers cut the cost of their mortgage, or some 50 per cent fewer than in previous rate cuts.
 
Still paying 4.3% with tsb and in negative equity so stuck and cant move

Am i the only one insulted by this move by AIB?

As previous poster says they must know somethings around the corner
 
Paul Reilly said:
Am i the only one insulted by this move by AIB?
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Can I ask why you are insulted by this move? Is it because you cannot switch or for some other reason?

Personally, any downward pressure on mortgage rates can only be a good thing from a consumers point of view. As I said in a different post recently, I believe legislation is needed to protect customers who cannot switch, but the rest need to ultimately be resolved via increased competition.

Sadly, while inertia remains around switching by those who can, there is very little anyone is willing to do to assist them.


Paul Reilly said:
As previous poster says they must know somethings around the corner
Click to expand...
Yes, there are a few things floating around. Noonan does not have his absolute majority to protect the banks, and FF have said that this area is very important to them. This is something FF can take full credit for, and an election promise met even without being in government. There will be increased pressure here for a short time at least in government circles.

Then there is Frank Mortgages - coming at some stage in the next while - this will automatically create downward pressure for LTV <50%. If AIB capture a set of customers at say 2.95% (by dropping by 0.15% when they enter the market) and Frank Mortgages offer 2.8%, the difference may not be enough for people to move. KBC on the other hand don't pass on cuts to existing customers meaning the difference would be larger.

I have no idea how many customers today have LTV <60% when they take out their initial mortgage, which probably means if Frank is going after 'conservative lending' it will be the switching market it will target initially.

Just my thoughts anyway !
 
gnf_ireland said:
I thought they would be targeting lower LTV than that, given the CB rules.
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What have the Central Bank rules got to do with it?

The rules won't apply to them.

So they will develop their own criteria. They know that there have been very low losses in the <80% LTV, <3.5 times income book, so they will lend at around this level.

There wouldn't be enough of a market if they dropped the LTV limit to, say, 70%.

Brendan
 
gnf_ireland said:
I thought they would be targeting lower LTV than that, given the CB rules. I would classify LTV 80% as 'normal' lending in the current environment
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Whatever about Central Bank rules, I can't see the business rationale for undercutting incumbents' rates to that extent at those kinds of LTVs.

Far juicier risk-adjusted returns at the "ultra prime" end of the market. Sub 60% LTVs, low LTI/DTI ratios on non-jumbo mortgages with relatively short terms - that's the market I'd be targeting if I was a new entrant to the mortgage market.
 
Brendan Burgess said:
There wouldn't be enough of a market if they dropped the LTV limit to, say, 70%.
Click to expand...

Completely understand this point - they ultimately have to determine how to best balance their risk appetite with the customers they are likely to get in the short term, while they find their feet.

Personally, I would have thought they would have targeted a lower LTV rate initially and see how that would go. That said, getting people to switch is tough at the best of time, and the market for low LTV initially may be limited


We also know that at any LTV someone can stop paying their mortgage and the repossession process is slow. The question is more how much funds are eaten trying to repossess the property. I appreciate someone with a lower LTV is more likely to want to protect whatever equity they have in the property - all other things being equal.
 
Brendan Burgess said:
There wouldn't be enough of a market if they dropped the LTV limit to, say, 70%.
Click to expand...

There is plenty of business in that category in the switcher market (which has increased dramatically over the last 12 months, while the FTB market has now stalled).

Bear in mind that switchers have already demonstrated repayment capacity/discipline and a lender will typically be "on risk" of default for a shorter term.

I have never understood why Irish lenders charge very similar rates to borrowers with dramatically different risk profiles.
 
We pay too much, Irish rates need to reduce, more competition. Where are Bank of Ireland in all this, they never passed on the last rate decrease and then try and make out their fixed rates products are wonderful. We should take the streets like we did with Irish Water.
 
I live in Sligo

When I bought house it had LTV 92%

Thats coz i paid 8% straight up.

In the past 10 years Ive never missed a payment

Now my LTV is 130%

This is why I and many people in the West are stuck.

I suppose we did wrong in buying a house at the height of the boom allbeit a small one so we are punished for this criminal offence.

I say its similar to a category 3 offence crime where you are fined 5k for carrying out business in a fraudulent manner. Whereas so far wev been overcharged by at least 5k.

The government therefore has treated all VM holders as criminals.
 
Introduction of a €2,000 -
I assume there will be a lock in period for this? I can't find out anything on it from the AIB website
 
There most be immediate legislation brought in to stop this carry on.
It's banks gouging hard pressed existing customers.
It's appalling.

The CB needs to do something radical also to put manners on this gouging.
Force the likes of KBC in particular to carry a massive proviso for new business promotion
"This is merely an opening offer and we can offer no guarantee once you are an existing customer that you will not be excluded in various variable rate reductions we may offer"

A bank should not be allowed to offer a new customer a preferential rate of borrowing than the one being paid by existing customers on an identical LTV.

I made the following analogy some months ago and stand over it

Imagine the absurdity of a publican putting up a sign

"All pints for new customers €3.50, Regulars €5"
 
Silvio Dante said:
Imagine the absurdity of a publican putting up a sign
"All pints for new customers €3.50, Regulars €5"
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"And all pints for those who can't afford it are free/available after a long drawn-out negotiation at a knock down price to what you can afford"!

Probably even itself out at €4.50 a pint would you say
 
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