Ah, good old AIB break fees.
Seemingly what they do is use both 5 years and 7 years, and give you the best of each calculation.
Looks like they're using 7 years, which is 3.15%.
balance * (3.5% - 3.15%) * 5.5
It's not exact, because they also factor in that your balance would reduce over the remaining term.
This works out far more favourably for you than using market rates (it'd be over 10k if they did).
Once you're moving to a rate <3.15%, you'll be saving more than the break fee. And that's before factoring in cashback.