New homeowners will have to fork out an additional €300 a year after AIB announced price hikes to its fixed-rate mortgages.
The bank has announced an immediate 0.5% increase but those who are currently in the process of securing a mortgage will have four weeks to draw down before it takes effect.
Those who are applying for a variable-rate mortgage will not be affected.
The new higher rate will apply to the AIB, ESB, and Haven brands, with hikes of up to €300 expected.
But the bank confirmed the price increases won’t affect current customers - only new customers and those switching.
It will come into effect from November 14.
AIB said: “These changes will not affect any of the bank’s variable or tracker mortgage rates while existing fixed mortgage rates are also not affected.
“More than half of our mortgage customers are already on a fixed-rate mortgage.”
The bank said they’re implementing the increase following the European Central Bank’s decision to hike interest rates by 1.25 percentage points since July.
Up until now, AIB only passed on interest-rate increases to customers with tracker mortgages because of contractual obligations.
Those who get a new €100,000 five-year fixed-rate mortgage with a loan value of 50%-80% over a 25-year term will see their monthly payments jump from €431.01 to €455.91.
Trevor Grant, Chairperson of the Association of Irish Mortgage Advisors, said: “It is good to see that AIB, EBS, and Haven are allowing applicants who have been loan approved up to four weeks to close out on the mortgage they have applied for.
“This decision is welcome and follows extensive lobbying from mortgage brokers throughout the country when Finance Ireland initially chose not to offer such notice.
“This will enable hundreds of mortgage applicants to close on their new homes or secure a much sought-after mortgage switching deal.”
He added: “Moves by lenders to introduce rate increases are to be expected and understandable with the ECB increasing their rates.
“Following increases totalling 1.25 per cent from the ECB, this 0.5 per cent increase isn’t as bad as could have been expected and will act as the another push that many mortgage holders needed to reassess their current mortgage terms, appreciate huge difference in mortgage deals and look for better value with their own lender or, more likely, with another lender.”
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