AIB ups competition in green mortgage with fresh rate cuts

Geraldine Casey Managing Director Retail Banking AIB

AIB has moved to take a greater slice of green mortgages activity by cutting rates on its fixed-rate products by 0.2 of a percentage point to a market-leading low.

The bank offers five-year fixed-rate green loans, while its EBS and Haven subsidiaries offer four-year products. The reductions will apply all three brands, effective from Tuesday.

Homes with a building energy rating (Ber) of B3 or higher are eligible for green mortgages among Irish lenders and are typically priced more cheaply than standard home loans.

The rate on AIB’s five-year green product where the loan is less than half the size of the property’s value will fall by a fifth of a percentage point to 3.45 per cent. The rate on such mortgages with a loan-to-value ratio of 50 to 80 per cent falls to 3.55 per cent.

A monthly repayment on a new €300,000 AIB five-year green fixed rate mortgage with a loan to value of 50-80 per cent over a 25 year term will, for example, be €1,508.70, according to the bank. Borrowers with the same profile but who are the previous rate are paying €32.28 more a month.

AIB has also cut the rate on its four-year green product to 3.55 per cent, while that of its Haven unit falls to 3.45 per cent. The new rates are available to both new and existing customers across all three brands, it said.

Bank of Ireland’s cheapest green-mortgage rate is 3.65 per cent for four-year fixed product where the loan is at least €250,000, according to figures on the lender’s website. PTSB green rates start at 3.8 per cent for a three-year fixed period.

According to the Sustainable Energy Authority of Ireland in the first half of 2023, more than 19,000 upgrades were completed. Those that have achieved a Ber rating of 3 or higher may qualify for a green mortgage as a result.

“We’re delighted to announce this mortgage rate cut across all our brands, AIB, EBS and Haven, which makes our green mortgage product market leading and will be available to both new and existing customers,” said Geraldine Casey, managing director of Retail Banking at AIB.

“I would encourage customers to check if they are eligible for a cheaper rate, particularly those who have carried out retrofitting work on their homes to improve the energy rating to between A1 and B3. Reducing our green mortgage rates aligns with our strategy to further green our loan book as we support customers to make more sustainable choices.”

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Joe Brennan is Markets Correspondent of The Irish Times