Revalue home for lower mortgage rate – AIB bids to stop switchers
AIB will allow mortgage holders to revalue their homes and offer a lower interest rate to those with equity built up.
The banking group has now written to thousands of customers on variable rates offering them the deal.
It could see someone on a 3.15pc variable qualify for an interest rate as low as 2.75pc.
Analysts said the offer was a defensive one to protect the bank from customers switching their mortgage to another player.
Ulster Bank offers a rate as low as 2.3pc for two years fixed.
The AIB deal will apply to AIB, EBS and Haven customers and represents a change of tack for the bank which up to now was not offering so-called loan-tovalue mortgage rates.
Mortgages based on the equity in a home are already offered by Bank of Ireland, Permanent TSB and KBC Bank.
But up to now AIB has chosen to compete by offering a low variable rate, with no allowance made for loan to values.
The new offer will see someone with a €250,000 mortgage on AIB’s variable rate qualifying for a rate that will save them up to €55 a month, assuming they owe 50pc less than the value of the home.
To take advantage of the lower rate customers need to request the move to what the bank is calling a Loan-To-Value (LTV) Variable Rate and obtain a valuation to support the switch.
Bankers have commented in the past about the poor take-up of offers to mortgage customers of lower rates based on property values when compared with what is owed.
Permanent TSB said that just a third of its variable rate customers have bothered to move to a lower LTV mortgage.
KBC Bank and Bank of Ireland told an Oireachtas Committee last year there was a poor take-up of the offers.
AIB said the LTV option was part of an “improvement to our customer mortgage proposition”.