AIB has announced it will cut mortgage rates by up to 0.25% from the start of December.

It said the new standard variable and Loan to Value rate reductions will affect mortgages from AIB, EBS and Haven and will be available to both new and existing customers.

It is thought the changes will affect 146,000 existing mortgage account holders.

The bank's standard variable rate will drop to 4.15% from 1 December, while the EBS rate will be cut to 4.33% and Haven's to 4.35%.

Loan to Value rates at AIB and Haven will fall by 0.24%, while EBS rates are to drop by 0.25%.

Fianna Fáil Finance spokesperson on Finance, Michael McGrath, said more needed to be done to reduce rates being charged by banks in Ireland.

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"On behalf of Fianna Fáil, I have been highlighting for quite some time the excessive variable interest rates being charged by the banks in Ireland," he said. "I hope now that this move by AIB will trigger a round of variable rate cuts across the banking system.

"The ECB's main refinancing rate stands at a historic low of 0.05% following a series of rate cuts. While the customers of Irish banks on tracker products have benefitted directly from these rate reductions, others have been denied the benefit of the rate cuts. SMEs, variable rate mortgage holders and other personal borrowers continue to pay interest rates in Ireland that are dramatically out of line with other eurozone countries.

"While the Irish government can access new borrowing at cheap, attractive rates of interest, the same cannot be said for the customers of Irish banks. The average interest rate being charged in the euro zone for new residential mortgages is 2.64%.

"The Central Bank's claim that the rate for new mortgage lending in Ireland is 3.15% is deeply misleading as it includes the restructuring of existing tracker mortgages. In truth, a new mortgage holder in Ireland can expect to be paying between 4.25% and 4.5% depending on loan to value."

(IT/JP)