AIB has launched what should be a series of mortgage rate hikes by major banks.
Experts said rivals from the Bank of Ireland and the permanent bank TSB could raise interest rates as early as next week.
The fixed rates of AIB and its subsidiaries EBS and Haven have increased by 0.5 percentage points with immediate effect, in a move that should make € 300 more expensive per year for new borrowers and converters. But in a surprising move, it didn’t raise its floating rates.
The Bank of Ireland and the permanent TSB are now expected to raise fixed rates and may also raise floating rates, in response to aggressive rate hikes by the European Central Bank (ECB).
The European Central Bank has already raised the key refinancing rate by 1.25 percentage points, with the same expected by the end of the year. However, the fact that the fixed interest rates of AIB, Haven and EBS are only 0.5 percentage points higher is pushing the Bank of Ireland and the permanent TSB to limit the rate hike.
Non-bank lenders Avant Money, ICS Mortgages and Finance Ireland have already raised rates this year, and some have done so repeatedly. Mortgages sold to vulture funds also increased.
Mortgage broker Michael Dowling said Permanent TSB and Bank of Ireland will now be under constant pressure to stop any floating rate hikes after AIB has not raised its variables.
Both banks have more expensive variants of AIB.
However, the Bank of Ireland and TSB Perpetual Bank are expected to raise their fixed interest rates as early as next week.
“The Bank of Ireland and the permanent TSB can absorb the ECB’s rate change decision for another two weeks, as they still have some of the most expensive variables in the market,” Dowling said.
He said that the fact that AIB only raised its fixed rates by 0.5 percentage points means the two banks are likely to announce similar interest rate hikes next week.
The higher fixed rates from AIB, Haven and EBS will add € 25 to the monthly costs for every € 100,000 borrowed. This only applies to new fixed prices and not to existing repairs.
The new higher rates for those who approved the mortgage are about to take out a mortgage to buy a house, and the money changers will not go into effect until November 14.
This will give people in the mortgage process four weeks to reach recession before the new rates begin.
This contrasts with the Irish Financial Agency which announced higher loan rates with immediate effect for anyone who had not submitted a withdrawal request prior to the announcement of the rate hike.
AIB said the hikes were in response to the European Central Bank’s decisions to raise interest rates by 1.25 percentage points since July.
“These changes will not affect any of the bank’s variable or tracked mortgage rates, while the current fixed mortgage rates will not be affected,” he said.
“More than half of our mortgage clients already have a fixed rate mortgage. “
So far, the AIB has passed on interest rate increases only to monitored mortgage customers, as contractually obliged to do the bank.
AIB specifies that the monthly repayment of a new green loan of 100,000 euros in five years with a loan of 50% to 80%, in 25 years, would be 455.91 euros. The previous monthly payment would have been 431 euros.
The Bank of Ireland and TSB Permanente said they keep interest rates in check.
