AIB has announced it is reducing its one year fixed interest rate for first time buyer owner occupiers to an interest rate of 2.49%.
The bank, recently recapitalised by the Irish Government, said the new rate will be available to first time buyer owner occupiers from Monday 16th February 2009 on all mortgages sanctioned by 31st March 2009 and drawn down by 30th June 2009.
This offer along with improved affordability in the housing market strengthens the hand of first time buyers even further. Year on year, repayments for first time buyers are down by over â‚¬500 per month in the first year based on a combination of the drop in house prices and the reduction in our fixed rate pricing. This is a conservative estimate based on a published industry index which shows prices down c. 14% year on year, while anecdotal evidence suggests that Irish house prices could in fact have fallen by as much as 30 per cent from their peak in 2006 meaning repayments have fallen by even more.
According to an AIB Global Treasury Economic Research report issued on 5th February 2009, dynamics are beginning to change in the Irish housing market and while problems still remain, over time, the reduced level of housing output and improved affordability conditions will help stabilise the market.
AIB also announced that from 16th February 2009, it is introducing new Loan to Value (LTV) variable rates for new owner occupier mortgages. The current standard variable rate for owner occupiers will no longer be available for new business from this date. Existing customers on standard variable rates will not be affected.
Donal Forde, Managing Director, AIB Ban