AIB’s Haven unit cuts four-year ‘green mortgage’ rate to 2%

Company also cuts three-year standard fixed-rate mortgage

AIB subsidiary Haven has cut its four-year fixed "green mortgage" rate to 2 per cent, and dropped its standard three-year fixed rate to 2.35 per cent.

Both rates will be reduced by 0.15 of a percentage point from Tuesday. The green mortgage rate is available to customers whose homes have a BER rating of B3 or higher regardless of loan-to-value (LTV) ratio. Haven launched the green mortgage in 2020.

The standard three-year rate has been cut to 2.35 per cent from 2.55 per cent for both existing customers and and new ones.

"Haven now offers the most competitive green mortgage in the market, available to all new and existing customers regardless of their loan to value," said Kieran Tansey, managing director of Haven.

On the basis of the average mortgage drawn down last year – €242,000 – over 20 years, the new green mortgage rate would mean monthly repayments of €1,222. Monthly payments on the standard 2.35 per cent rate for the same mortgage would be €1,262.

The new reductions follow Haven’s cuts to its seven- and 10-year fixed mortgage rates three months ago.

Both Avant and Finance Ireland have also cut their mortgage rates in recent weeks, moves that coincide with the exit of both KBC and Ulster Bank from the market.

In December, Finance Ireland said it would cuts its 10-, 15- and 20-year fixed rates by up to 15 basis points, and also introduce a 25-year mortgage.

Incentives

Avant Money has cut rates on its fixed mortgages covering three, four, five, seven and 10 years for customers that meet a certain LTV threshold. The company’s cheapest mortgage is 1.95 per cent for a fixed rate mortgage of three to seven years on a LTV ratio of less than 60 per cent.

Both lenders have also introduced cash-back incentives for mortgage switchers, covering up to €1,500. Haven also offers a €5,000 cashback to first-time buyers, switchers, movers and holiday home buyers fulfilling certain criteria or €2,000 towards the costs of switching mortgages to Haven.

The incentives come as customers at Ulster Bank and KBC consider their mortgage options, with both lenders due to exit the Irish market.

But other mortgage companies have warned a rise in rates may be on the way as inflationary pressures continue. Fergal McGrath, chief executive of Dilosk, a non-bank lender that offers home loans under the ICS brand, told The Irish Times Inside Business podcast that, although rate rises weren’t currently on the cards, they could not be ruled out.

Irish consumer price inflation hit 5.5 per cent in December, the highest level in two decades. The Bank of England has already increased rates in the UK, while the Federal Reserve has signalled at least three rate rises for this year. To date, the European Central Bank, which sets rates for euro zone countries, has not flagged any increase.