The bank is reducing its four-year fixed rate by 0.25 percentage points, months after it previously announced reductions.
It comes after recent reductions to fixed and variable rates by AIB, Haven, EBS, Bank of Ireland, PTSB and Avant Money.
At the start of the month, the European Central Bank (ECB) cut its main interest rates, a move that will benefit 180,000 tracker mortgage holders.
Finance Ireland and ICS/Dilosk responded to the ECB reduction by cutting their variable rates.
Now AIB is announcing a second rate reduction, with its four-year fixed mortgage rate for customers borrowing €250,000 or more going down by 0.25 points from July 3.
The new rate is also available to existing AIB mortgage customers with a balance of at least €250,000.
Switcher customers who meet the criteria and opt for the fixed rate will also benefit from AIB’s €3,000 switcher cash offer.
At a time when the average house price in Ireland is €335,000, according to the Central Statistics Office, the four-year fixed rate has proved popular with customers seeking the security of a fixed rate when borrowing at least €250,000, the bank said.
The move by AIB will mean the four-year rate for those taking out a mortgage who have a loan to value (LTV) of less than 50pc will come down from 4.2pc to 3.95pc.
The rate for those with an LTV of between 50pc and 80pc will go to 4.10pc, with the rate for those with an LTV of more than 80pc dropping from 4.55pc to 4.30pc.
These latest reductions follow a number of cuts to green mortgage rates by AIB Group in April.
AIB’s latest move is a response to the fact its non-green rate offerings have ended up being higher than those of competitors
What is the new mortgage interest relief and am I eligible to claim it?
AIB’s managing director of retail banking, Geraldine Casey, said the new rate cuts could save customers around €500 a year.
A monthly repayment on a new €300,000 four-year fixed rate mortgage will be €1,598.32. This would apply to mortgages of €250,000 or more with an LTV of 50pc to 80pc, over a 25-year term.
This is down from €1,640, representing a saving of €41.65 a month. Over a year, this works out at a saving of €499.80.
Managing director of broker Doddl.ie, Martina Hennessy, said AIB had previously reduced its green mortgage rates.
She said AIB’s latest move is a response to the fact its non-green rate offerings have ended up being higher than those of competitors.
“As rates fall across the market, AIB will be looking to retain existing customers. While this rate cut is positive news, recent reductions have meant there are still significant savings to be made for those looking to switch their mortgage,” Ms Hennessy said.
Meanwhile, AIB and Bank of Ireland have joined PTSB and credit unions in taking part in the Government’s low-cost home retrofit loans scheme.
Loans are on offer at about half the interest rate for similar ones on the market.
The Department of the Environment said rates on the scheme are available from as low as 3pc.
Homeowners can borrow from €5,000 to €75,000 to make their homes warmer and more energy efficient.
