Business Irish

Saturday 24 March 2018

AIB to hike mortgage costs for those on variable rates

Charlie Weston

Charlie Weston

AIB is to hike its mortgage costs for those on variable rates from September.

The move will mean additional payments of €60 a month for a homeowner with a €200,000 mortgage.

Around 70,000 homeowners are set to be impacted by the rise in the variable rate.

Owner-occupiers will see their standard variable mortgage cost increase from 3pc to 3.5pc.

The move is despite the European Central Bank cutting is key lending rate to banks at the start of this month. It was the third time the ECB has recently cut rates.

Every 0.25pc rate increase pushes up the monthly cost of servicing each €100,000 borrowed by about €15.

This means that a family with a €300,0000 mortgage faces monthly increases of €90 from September 3. Over a full year this will cost an extra €1,080.

Around one in five of AIB’s mortgage customers will be affected by the move.

Bank boss David Duffy defended the move today, claiming the bank will still have the lowest variable rate in the market after the increase.

The bank’s variable rates for investors will jump from 3.95pc to 4.45pc.

Figures show that 34,000 customers have had their mortgages re-arranged with AIB.

Personal Finance Editor

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