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AIB, the country’s largest mortgage lender, increased its interest rate by 0.5%

DUBLIN: AIB has raised mortgage interest rates in Ireland by 0.5% on fixed mortgages. The revised rates came into effect yesterday for AIB, EBS, and Haven mortgages. The increase will have no effect on those who already have fixed or variable rate mortgages. Fixed-rate mortgages account for more than half of the bank’s mortgage holders. 

After the ECB rate hike, AIB, the country’s largest mortgage lender, became the country’s first retail bank to raise fixed and variable rates. The remaining four major banks are expected to follow suit. Avant, Finance Ireland, and ICS are among the non-bank lenders that have already raised interest rates. Banks in every other European country raised interest rates, but Irish banks did not.

According to the bank, those who take out a new mortgage before November 14 will be able to pay the old rates. With the new rate in effect, the monthly repayment on a 100,000 euro green fixed mortgage with a tenure of 25 years is expected to rise from 431.01 to 455.91 euros. 

Customers who purchase homes with energy rating of B3 or higher will also continue to benefit from lower green mortgage fixed rates, according to AIB. AIB Tracker customers are already subject to the European Central Bank’s higher interest rate. As a result, they must pay 1.25% interest.

AIB has also stated that it will raise deposit interest rates by the end of November. Customers who deposit more than €15,000 will also receive a one-year fixed-term deposit with a 0.25% interest rate.

Will the price increase or decrease, remaining uncertain?

The boom in property prices has lasted nearly a decade, fueled by a generation that has been bewildered by a generation looking for a place to lay their heads. There are signs that the inflationary period is coming to an end.

Since 2013, Irish house prices have more than doubled, with property syndicates finding new ways to defy economists’ predictions of falling prices each year.

However, the current argument is that they can’t help themselves at the peak of growth. According to Cormac Lucey, a leading property expert and chairman of Chartered Accountants Ireland, house prices will fall by 10% over the next year and a half. However, the latest Daft.ie house price report, released last week, shows long-awaited price stability. It’s only a small, nominal increase!

The average listed price in the third quarter of 2022 was €311,514—up only 0.1% from the second quarter of the year.

Cormac Lucey stated on RTÉ’s Brendan O’Connor Show that he anticipates price decreases in the coming months. The issue here is that supply is still inadequate. If house prices fall, it may be easier for couples or households looking for a home to save for a down payment. I believe they will fall slightly over the next 18 months, perhaps by 10%. However, he claims that there are still more people in the market than there are available houses. According to the Daft.ie report, the number of homes for sale on September 1 was around 15,500.

“This year, another 25,000 new homes could be completed in Ireland, and with that comes problems,” said another expert.

According to the most recent SCSI figures, construction costs have risen by around 15% in a year, and this will be reflected in prices. Rising interest rates and the rising cost of living, on the other hand, may influence home sellers’ decisions.

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