Fixed rates are generally offered at a premium to what the banks expect the SVR to run at over the specified fixed period. They know that some people fear interest rate rises and charge this premium to cream a little extra profit from them.
My general advice when someone asks whether to go for fixed or variable is to work out how much the Fixed Rate would cost them monthly and to go for the variable rate - but overpay to the extent that the repayments work out the same, thus reducing the term.
Of course, rates could rise but I think AIB risks excessive additional arrears were they to add 1%+ to their, already profitable, current rates. They also risk another bank coming to the Irish market when they see 50% LTV mortgages earning in excess of 5%.
Then there is competition from the likes of KBC and any potential new entrants. KBC's rate for your mortgage would be 3.85%. By going for a fixed rate, you remove the option to remortgage to the better deal of any new entrants coming to the market for 5 years.
Let's say you were taking the above mortgage over 25 years. The monthly repayment if you went for fixed would be €338.89. The monthly repayment if you went for variable would be €304.63.
However, you could take the variable rate over 21 years instead for €337.52 monthly. That's an extra 4 years mortgage-free at the end of the term.
My thoughts are that, when the ECB starts raising rates, the banks SVR's are unlikely to following them up to the same extent. The SVR's of today are completely detached from the ECB rate.
The only exception to my advice above is where someones budget is really tight and they could not withstand a rise in the SVR. However, banks aren't approving mortgages for people who couldn't afford such a rise anyway.