# AIB, EBS cut variable interest rates



## Knuttell (30 Oct 2014)

THOUSANDS of homeowners on variable mortgage rates are set to benefit after AIB, EBS and Haven cut their home-loan rates.

The lenders, which are all part of the AIB Group, have reduced the variable rate by 0.25pc.


> It is the first time variable rates have been cut in years, despite the European Central Bank rate being cut twice this year. The ECB rate is now at a record low of just 0.15pc.
> 
> New and existing borrowers with AIB, EBS and Haven gain from the rate cuts.
> 
> ...


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## chrisboy (30 Oct 2014)

I certainly think we can thank Brendan for this!


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## Knuttell (30 Oct 2014)

Indeed,it really got a lot of traction from this site,I wonder though how much this has to do with AIB trying to steal competitors existing business,thing will dry up quickly in the new year with the CBs new lending criteria.


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## chrisboy (30 Oct 2014)

It's a cartel anyway, the rest of the banks will no doubt follow suit next week..


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## Brendan Burgess (30 Oct 2014)

My summary of AIB rates (Haven and EBS are a bit higher)



 New Standard Variable Rate owner occupiers |4.15%
LTV >80%| 4.25%
LTV 50% - 80%| 4.05%
LTV <50%|3.85% *AIB, EBS and Haven reduce mortgage interest rates*​ ·         *New variable rates come in to effect from 1 December 2014 for new and existing customers*​ ·         *Reduction of 0.25% in standard variable rate for AIB, EBS and Haven customers*​ ·         *New market leading fixed rates to come into effect from 4 November 2014*​  AIB Group today (Thursday 30th October) announces a number of reductions to its variable and fixed interest rates for owner occupier mortgages. These include a reduction of 0.25% for Standard Variable Rate (SVR) customers and the introduction of new lower Loan to Value (LTV) and fixed rates across AIB, EBS and Haven.  
  The move benefits approx. 146,000 existing mortgage account holders; for example customers with a €200,000 mortgage will save up to €334 per annum, based on a 25 year term.
  AIB Group is also introducing new market-leading fixed mortgage rates across all three brands. These include 3.80% in respect of its three year fixed rate and 3.90% for its five year fixed-rate mortgages. 
  New and existing customers will benefit from reduced pricing across all LTV variable rates. AIB and Haven are cutting all LTV mortgage rates by 0.24%, while EBS is reducing all its LTV rates by 0.25%. AIB and Haven customers with an LTV of 50% or less will see their interest rate drop to 3.85%, while EBS customers will see it fall to 3.80%.
  Bernard Byrne, Director of Personal, Business and Corporate Banking, said “AIB is now in a position to reduce variable mortgage interest rates due to the bank’s underlying positive performance and funding cost reductions. The introduction of the Bank’s new fixed rate pricing will provide better value and certainty for customers.’’
*-See also tables below-*​ 



*Notes to Editors:*
1.       Revised variable rates come in to effect from 1 December 2014 for new and existing customers with fixed rates to come into effect from 4 November 2014
2.       Existing fixed-rate customers will not be impacted until their current fixed-rate term expires. However, they will have the option to fix again once their current term expires and will be in a position to avail of the new fixed rates at that point.
3.       This reduction is not linked to the European Central Bank base interest rate and will therefore not apply to tracker mortgage holders.
4.       *EBS and Haven form part of AIB Group.*
5.       *Individual SVR Customers will be advised of the changes in writing.*
6.       *The changes announced apply to the Republic of Ireland only (AIB, EBS and Haven)*


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## sisterjoan (30 Oct 2014)

That certainly cheered me up   - I can hardly believe it.  For once good news for variable rate mortgage holders


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## Brendan Burgess (30 Oct 2014)

AIB customers with an SVR mortgage will be paying 4.15% irrespective of their LTV. The type of mortgage you have is determined by the type you took out initially. If the initial LTV was > 80%, that is the rate you will be paying now, even if you have since reduced your LTV to <50%.

Of course a Bank of Ireland customer with an LTV of <50% could switch to AIB and get the 3.85% rate.

Update: Apparently AIB customers can submit a revised valuation and will qualify for the lower LTV rate


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## jonq74 (30 Oct 2014)

good news. I wonder is it worth fixing for 5 years though at 3.9% as AIB say their variable rate is not influenced by ECB lending rates now any time someone asks them why up until now they have not reduced the variable rate when the ECB reduces its rate.


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## Knuttell (30 Oct 2014)

jonq74 said:


> good news. I wonder is it worth fixing for 5 years though at 3.9% as AIB say their variable rate is not influenced by ECB lending rates .



I am holding out in the hope of a new foreign bank opening here offering tracker mortgages...maybe deluded but they would have them queuing round the block and could cherry pick all day and night.


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## sona_sasta (30 Oct 2014)

Brendan Burgess said:


> AIB customers with an SVR mortgage will be paying 4.15% irrespective of their LTV. The type of mortgage you have is determined by the type you took out initially. If the initial LTV was > 80%, that is the rate you will be paying now, even if you have since reduced your LTV to <50%.



That's incorrect - it is possible to move between LTV bands by submitting an up to date valuation of your property. I did this at the end of 2013 on a mortgage with AIB.


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## tvman (30 Oct 2014)

The cut in the 5 year rate presumably signals further cuts in the variable rate in the near future?


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## Brendan Burgess (30 Oct 2014)

sona_sasta said:


> That's incorrect - it is possible to move between LTV bands by submitting an up to date valuation of your property. I did this at the end of 2013 on a mortgage with AIB.



Hi Sona

Thanks for that correction. 

Updated now.

Brendan


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## toby2111 (30 Oct 2014)

tvman said:


> The cut in the 5 year rate presumably signals further cuts in the variable rate in the near future?


 
I'm tempted by the 2 or 3 year fixed with EBS at 3.8%. Its a big drop from my variable of 4.58%....but I'm also suspicious. Why are they doing this now?Is there something coming down the line?
Would this-
http://www.independent.ie/business/...s-to-take-on-lenders-over-rates-30634246.html

have anything to do with it?


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## NightOwl668 (30 Oct 2014)

The "doubting Thomas" in me is thinking - is this AIB 
(a) pre-empting / intending a further reduction  in variable rates down the line and tempting borrowers to lock in to fixed rates  in advance of lower variable rate ?  or 
(b) enticing borrowers away from competitor mortgage providers  ? or 
(c) a combination of both above ? 
While accepting that AIB or any other lender will always strategically adjust interest rates with a view to maximising return and market share , the prospect  of fixing for 3 years @3.80% is very tempting ! Is this an AIB Trojan horse or as a result of muddling through the stress tests unscathed ?


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## rodger (30 Oct 2014)

Great to see AIB group doing the decent thing.
They were first to make a concession after getting the thumbs up from ECB stress tests.

Hopefully other banks such as bank of ....... will be able to do the decent thing soon.

Any bank charging more than 5% is plain punitive
And hammering those customers who are currently bailing same banks out with property tax, income tax and universal social charge.

I mean where is the justice in handing out loans then when economy goes tits up the consumer gets zero concession? And is charged 5.65%

I still am hopeful that bank of ........ will reduce the 5.65% rate they are charging on investment property.


Maybe once again I am being overly optimistic?
Like when I took the loan in first  place


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## rodger (30 Oct 2014)

And while I'm at it: what pressure can be brought on those privately owned banks?

ECB rates:

June 8 2006	2.75%
August 3 2006	3.0%
October 5 2006	3.25%
December 7 2006	3.5%
March 8 2007	3.75%
June 6 2007	4.0%
July 3 2008	4.25%
October 8 2008	3.75%
November 6 2008	3.25%
December 4 2008	2.50%
January 15 2009	2.00%
March 5 2009	1.50%
April 2 2009	1.25%
May 7 2009	1.0%
April 7 2011	1.25%
July 7 2011	1.5%
November 3 2011	1.25%
December 8 2011	1.0%
July 5 2012	0.75%
May 2 2013	0.50%
November 7 2013	0.25%
June 5 2014	0.15%
September 4 2014	0.05%


Bank of .... rates:

2012 One of the largest mortgage lenders during the boom, Bank of Ireland will now see its standard-variable rate jump to 4.3pc for existing mortgage holdersfrom October 5. This is around the average variable rate in the market.

Then in 2013 the SVR jumped to 4.5%

Directly opposite to the ECB rate: so as the tracker profits decline they are compensated by SVR accounts. That to me is anti-competitive.

Presumably BOI can and do borrow from ECB at almost nothing: so they're making a profit either way: just scalping those unfortunates who are on SVR with BOI 

Also, if a property is in negative equity and cannot switch: that is another example of anti-competitiveness because the customer is *stuck* with the lender and the lender can do whatever they want.

Is there no pressure can be brought against this privately owned organisation?

Are there too few people on SVR to matter? 
Is it too much to expect the central bank to actually stand up for the consumer???

Are they simply pawns of the political masters who want strong banks, strong economy at any cost (and bow down to the european masters)


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## PolkaDot (31 Oct 2014)

What is the difference between a SVR mortgage and LTV mortgage with AIB?


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## Jackman (31 Oct 2014)

SVR is a standard variable rate of interest, LTV is the ratio of loan amount to the value of your home. They are two different things. Most mortgage interest rates are calculated using loan to value ratio, because obviously the more you borrow the higher the risk for the bank, so they will charge higher interest rates.


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## Jackman (31 Oct 2014)

Will this have any influence on Danske Bank variable rates (since there is speculation in some papers that other banks will follow suit)? Or is there any incentive for them to keep irish customers if they just want to exit the market I.e. Just force people to change to another bank altogether to get a better rate, and otherwise keep it at its present rate?


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## Butter (31 Oct 2014)

Well done & thanks to Brendan for highlighting this issue. 

I can't see Danske voluntarily doing a thing to adjust rates downwards - they want to get out of Ireland. Having people switch & remortgage would suit them.


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## dewdrop (31 Oct 2014)

Am I correct in saying that as for AIB is concerned the Standard Variable Rate no longer applies to new Mortgages and the Variable Rates are LTV in the 3 categories mentioned in their press release. The SVR has "discontinued" in brackets.


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## Brendan Burgess (31 Oct 2014)

The banks used to all charge all home loan customers the same "standard variable rate". But they have all now introduced much more sensible "Loan to Value" rates. Someone borrowing 90% will pay a higher rate than someone borrowing less than 50% 

But customers who took out SVR loans are still on those loans, which is why they still have to quote an SVR. 

I am not sure what happens when a fixed rate expires.  In some cases, they go onto the SVR by default. I am sure others will offer SVR options to the borrowers.


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## oceallachain (31 Oct 2014)

So, for EBS customers, should we fix now? And, if so, for how long? I'd be interested in hearing views here, especially Brendan's!!


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## Brendan Burgess (31 Oct 2014)

oceallachain said:


> So, for EBS customers, should we fix now? And, if so, for how long? I'd be interested in hearing views here, especially Brendan's!!



Ask and you will receive 

In the light of the AIB rate cuts, should I fix my mortgage rate?


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## leonmahon (31 Oct 2014)

If current asking prices in my area ring true my LTV will have decreased significantly. I bought in 2011 - I guess there must be plenty more in the same situation.

How easy is it to switch from BOI to AIB? What factors will the new valuation take in to account? EG There's a house on my road on the market with an asking c. 50% higher than what we paid in 2011. It's slightly bigger and end- as opposed to mid-terrace but much worse location, aspect and condition. 

ps @ceoldude I feel for you.


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## Brendan Burgess (31 Oct 2014)

I would probably hold off switching for a while to see how the other banks react to the AIB reductions. However, it might be no harm going into Bank of Ireland and asking for your rate to be reduced. 

You will need a new valuation of your premises if you are switching. 

Brendan


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## rodger (1 Nov 2014)

sona_sasta said:


> That's incorrect - it is possible to move between LTV bands by submitting an up to date valuation of your property. I did this at the end of 2013 on a mortgage with AIB.



Does that apply to Bank of Ireland also? 

Do these rates apply only to First time buyers?
Variable (LTV <=50%) 4.1% 4.2%
Variable (LTV >50% <=75%) 4.3% 4.4%
Variable (LTV >75% <=80%) 4.4% 4.5%
Variable (LTV >80%) 4.5% 4.6%


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## Emma1980 (5 Nov 2014)

Hi - i have my mortgage with Haven and rang today to request moving to a 5 year fixed rate at 3.9%. They wouldn't speak with me though, said i have to do it through by broker....is this normal practise? I mean, i pay the mortgage each month, not my broker so surely i should be able to make changes to my account if i so wish to!


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## Brendan Burgess (5 Nov 2014)

Hi Emma

Of course you should be able to deal with them without going through your broker.

Have you read this thread? 

In the light of the AIB rate cuts, should I fix my mortgage rate?

Brendan


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## Emma1980 (6 Nov 2014)

Thanks Brendan - i got onto my broker and he was baffled by it too!!

But yes, i did read that other thread AFTER i contacted Haven so maybe i'll hold out a bit longer!

Thanks


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## Carlie16 (8 Nov 2014)

Hi all,

Looking for some advice on whether to fix or go variable on a self build mortgage.  The estimated value on completion is €370000 and we will be borrowing €200000.
The EBS seem to be pushing a fixed rate for the following terms:

1 year @ 3.5%
2 and 3 years @ 3.8%
4 and 5 years @ 3.9%

The variable rate is currently 4.25%.

I'm just wondering what ye think would be the best option.  Any advice appreciated!


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## Brendan Burgess (8 Nov 2014)

this is covered in this thread

In the light of the AIB rate cuts, should I fix my mortgage rate?


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## Carlie16 (8 Nov 2014)

Thanks for that, Brendan.  Very informative.  This is a first mortgage and we are not very clued in on the whole thing! I guess it's just a personal decision at the end of the day. 

Thanks again.


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