Belfast Telegraph

Thursday 31 July 2014

AIB set to increase mortgage rates

Around 50,000 Allied Irish Bank customers are to be hit with a rise in mortgage interest rates

Allied Irish Bank (AIB) has announced around 50,000 homeowners are to be hit with a rise in mortgage interest rates.

The bailed-out bank revealed its standard variable mortgage rate will increase by 0.5% to 3.25% - just days after it recorded pre-tax losses of just over two billion euro for the first half of the year.

AIB said fixed rates would be rising for new owner occupier customers, while existing tracker rates and fixed rate contracts would not be affected.

Fixed rates will also be increased for new business in the buy-to-let market, with standard variable rates unchanged in this category.

AIB, one of the six banks guaranteed by the State, insisted it still offered competitive options for borrowers.

Head of mortgage products Michael Quirke said: "All mortgage lenders are facing the same issues in this funding environment.

"Funding availability on wholesale money markets for Irish financial institutions remains difficult.

"Unfortunately, we have little choice but to introduce this pricing change, which is a measured response to the significant challenges which must be overcome if we are to achieve an economic return on our loan book and thereby return to a sustainable business model," he said.

The move comes just a week after Bank of Ireland announced it was hiking up its standard variable mortgage rate to 3.49%.

Meanwhile, Permanent TSB, one of the country's biggest mortgage lenders, last month said its standard variable customers would be hit with a 0.5% increase.

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