AIB says it will increase money for mortgage-lending to €2bn

AIB says it plans to double the amount of money it is prepared to lend to would-be homeowners, from €1 billion to €2 billion this year.

The bank said it was upping its lending forecasts for this year because of “very positive trends” it had observed in the mortgage market last year.

AIB’s move follows an announcement earlier this week that Bank of Ireland has a fund of similar size in place for mortgages in 2013, while Permanent TSB has also committed to being more active in the lending market this year.

Earlier this month it said it was increasing the amount of mortgage loans it would make available by 500 per cent to €450 million.

AIB, which includes the former building society EBS, provided 45 per cent of the State’s home loans last year.

It said it has sanctioned €1.5 billion new mortgages in 2012, up 63 per cent on 2011, with the average first-time buyer borrowing €160,000.

The bank’s head of mortgages Jim O’Keeffe said AIB had seen “very positive trends in the 2012 figures” and he claimed the bank was “very much open for business”.

AIB’s standard variable rate of 4 per cent is still below the market average of 4.4 per cent.