AIB announces cut in variable mortgage interest rates

In addition, the banks EBS and Haven customers will benefit from a 0.38pc cut, the bank added today.

The cuts will take effect over the next couple of weeks and will benefit about 160,000 customers.

Following the move, AIB customers with a €200,000 mortgage will save €329 annually, based on a 25-year term -EBS/Haven SVR customers will save €508 a year.

The rate cuts apply to both owner-occupier and buy-to-let mortgages.

State-owned AIB came under pressure recently to cut variable interest rates – the rate remains just shy of 4pc.

The bank has also reported a further reduction in impaired loan volumes to €20.5bn to €1.7bn in the first quarter.

It also said total number of accounts in arrears in the Irish residential mortgage portfolio decreased by 6pc since December 2014 and 23pc since December 2013.

The bank remained profitable in the first quarter.

David Duffy, outgoing chief executive said: “Notwithstanding the improving operating environment, challenges remain including continued high levels of arrears in the mortgage and SME portfolios and elevated levels of impaired loans.

He added that the bank is also benefitting from quantatitive easing but this also has a negative impact on pension calculations.