AIB may reduce mortgage rates 'if costs come down'
AIB will look at reducing its variable interest rate for mortgage customers in June, its chief executive has said.
David Duffy said that if the bank's costs come down, it is possible that mortgage holders will be further cut.
AIB, EBS and Haven introduced a 0.25% cut to their variable rates in December.
Mr Duffy says if its costs continue to fall, variable mortgage holders could see a further reduction this summer.
"If we see that trend over the next couple of months continue towards our half-year financial year, we will then consider making a further rate cut," he said.
"But it will be on the basis of those variables, which are: cost of funding, our cost to manage the bank, and our operating cost at the end of the day - the risk operating cost.
"If all of those costs come down, as they have in the past, then we would be willing to consider another rate cut in the next couple of months."
Ciaran Phelan, CEO of the Irish Brokers Association, said a radical rethink in the approach to Standard Variable Rate (SVR) mortgages in Ireland is needed.
“Asking families to sign up to the most financially burdensome contract of their lives, which gives the other party carte blanche to increase the price whenever they like, is wholly unreasonable,” she said.
“Most other European and US markets are dominated primarily by long-term fixed rate contracts – spanning 20-30 years; so why can’t we do the same here? The answer: because it’s not in the banks interest to offer such deals.
“We desperately need more competition in this market and not enough is being done to deliver that competition.
“Overseas banks are reluctant to enter the Irish market right now but we may already have a viable alternative - Credit Unions have the cash, but the current legislation doesn’t support them entering the market in any meaningful way. Some joined-up thinking from the Government is required in this regard.”
