Business Irish

Saturday 20 January 2018

First-timers hit hardest as AIB ends low-rate deal

Charlie Weston

AIB has made it harder for first-time buyers to get a mortgage by withdrawing a number of discounted home loans aimed at new buyers, mortgage brokers claimed yesterday.

But the bank hit back, saying it is committed to the first-time buyer market. In the past few days, Allied Irish Banks has withdrawn a special low rate of 2.4pc that was aimed at first-timers. This was a one-year fixed-rate deal.

Under it, new buyers were able to borrow up to 92pc of the value of the property.

However, the best new buyer rate has shot up to 3.09pc, according to director of the Irish Mortgage Corporation, Frank Conway.

He said the new higher rate meant that the hardest hit of all the AIB customers by the new charges introduced last week were first-time buyers, as their rate had gone up by 0.69 percentage points, while existing borrowers were hit by, at most, a rise of 0.5 percentage points.

"The latest move by AIB is a disappointment as it means that the cost of borrowing for first-time buyers has been increased the most when compared to other sectors of the market.

"For example, the repayment on a €200,000 mortgage over a 30-year term increases from €779 (based on the 2.4pc rate) to €852 (based on the new 3.09pc rate) -- a rise of €73 a month for new customers."

Mr Conway, whose company has just started a recruitment drive for 10 new financial advisers, accused the bank of shifting away from first-time buyers.

But this was rejected by an AIB spokesman, who said: "AIB remains committed to supporting the mortgage market, in particular first-time buyers.

"Any suggestion to the contrary is not borne out by the numbers."

The bank said its share of the first-time buyer market had increased dramatically.


In 2009, AIB accounted for one in every three of first-time mortgages, but it is now writing 40pc of all new property transaction business in the country.

"Unfortunately, we have had to increase rates due to the high cost of funding we are experiencing," the bank said.

However, Michael Dowling, of the Irish Mortgage Advisers Federation, pointed out that AIB changed the way it calculated what a first-time buyer could borrow, meaning most would qualify for a smaller mortgages.

Mr Dowling said someone on a salary of €29,000 would previously have qualified for a mortgage of €165,000, but would only be sanctioned for €130,000 from now on. This is almost 20pc less.

Irish Independent

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