Mortgage rate reduced - why?

Mink

We took out the mortgage with AIB at the start of the year, 3.5% variable LTV <90%, the usual.

We just got a letter from the bank saying "The Bank's Loan to Value Variable rate applying to your loan will be amended from 3.5% to 3.15%"

I'm not complaining, I'm very happy about this, but can anyone shed light on this?

Has the ECB rate dropped & AIB following suit, I certainly haven't heard this being reported?

Did the bank automatically switch us to a <80% rate because the house values have gone up - I find this extremely unlikely but maybe it's a move to stop people even thinking about switching?

wench

They've brought all their rates down, see here
https://www.irishtimes.com/business/financial-services/aib-announces-0-25-reduction-in-standard-variable-rate-1.3222163

Chasing market share I expect.

rsynnott

You’re still on your existing LTV band. AIB is cutting rates for competitiveness purposes; except for trackers, current Irish rates have little to do with the ECB rate and are higher than in most other European countries.

They also cut their rates last year (in June or so) and again a year or so before that. Of course, what goes down can go up again, but for the moment as an AIB customer I’m not complaining!

morrga

Banks must be starting to feel guilty with their huge profit margins on the performing side of their loan book!

We had a loan offer for 3.45% earlier in the year and it was revised to 3.20%. The trend looks set for decreases rather than increases so this time next year I envisage plenty of rates below 3%. Unfortunately have to fix now as variable is just a no go area.

rsynnott

Nothing to do with guilt; banks don’t do guilt. It’s because other banks are cutting their rates, too; banks who don’t risk losing their good (ie performing, positive equity) customers to competitors while being left with mostly non-performing and negative equity customers.

johnnyskeleton

Bank of Ireland do a really sneaky thing where they have different variable LTV "products" every year. So if they want new customers they reduce the rate for new ltv variables but leave the older ones as they are. Very sneaky,and probaby misselling of a product given that if rates go up they can increase them.

So yeah, despite all the bad publicity AIB get, fair play to hem for reducing variable rates for old mortgages in line with the cuts to new rates!

morrga

rsynnott wrote: »

Nothing to do with guilt; banks don’t do guilt.

Apologies I had meant it with tongue in cheek!