AIB raises payment to mortgage switchers as the market heats up

Group will increase bonus by 50pc to give ‘more support’ to new customers

AIB Group is increasing the payment for those who move a mortgage to it, signalling that the switcher market is heating up.

AIB, EBS and Haven will bump the bonus by 50pc to €3,000 from May 27. AIB’s previous payment was €2,000.

The move comes after the switcher market fell off a cliff in the wake of 10 hikes in European interest rates, with banks and other mortgage lenders passing on around half of these in the form of higher fixed rates.

The decision by AIB Group to increase its payment from €2,000 to €3,000 indicates that the switcher market is about to get competitive. AIB said that the payment would help cover the costs associated with switching and was aimed at encouraging switching for mortgage customers, particularly those whose fixed rates are coming to an end.

Between 70,000 and 80,000 mortgage holders are completing their fixed-rate period this year.

Many of them are locked in at rates as low as 2pc.

But they are now faced with a market where typical fixed rates are at least double that.

The increased switcher payment would make AIB Group’s mortgage offerings even more competitive following recent rate reductions of 0.2 percentage points across AIB, EBS and Haven green mortgages last week, the bank said.

The switcher payment is available for eligible customers switching to an AIB Group mortgage.

The payment is also available for any customers already in the pipeline who draw down their mortgages from May 27.

In recent years many customers in Ireland opted for security, with half locking in to fixed-rate mortgage terms.

Many of these terms may now be coming to an end and as a result the switcher market was likely to become more active again, the bank said.

Geraldine Casey, AIB managing director of retail banking, said: “We know the mortgage process can seem a bit overwhelming.

“That’s why we’re making it easier for customers to switch to us by increasing the switcher payment, so customers have more support in covering their costs,” she added.

Broker Michael Dowling said that with 70,000 mortgage customers coming off fixed rates in 2024, borrowers need to look at the rates available from any bank, not just the incentive to switch to that bank.

“While the €3,000 offer to switch will more than cover the costs of moving bank, AIB Group fixed rates are more than one percentage point more expensive than what is available on the market, for non-green customers.”

He said that the AIB five-year fixed rate was 5pc for an 80pc to 90pc loan-tovalue, but the cheapest rate was 4.1pc.

Taking a €300,000 mortgage, on a 35-year term, the difference is €170 a month, or €10,200 over the five-year period.

But he added that the newly increased AIB Group incentive was excellent for those borrowers who had a green-rated property, given that the bank now offered the cheapest green rates on the market.

“The mortgage process can seem a bit overwhelming. That’s why we’re making it easier for customers to switch”