AIB increased its variable interest rate for mortgage holders by 0.5% at the close of business today.
The bank is also increasing its fixed mortgage rates, but tracker rates remain unchanged.
The increase follows an earlier move from Irish Life and Permanent in February.
The move adds another €52 in monthly repayments on a 30-year, €200,000 home loan for customers on a standard variable rate.
AIB said the cost of money on the international markets remains high and it is not sustainable for the bank to continue to provide mortgages at rates below those it is paying to borrow money.
Earlier this month, when the bank released its financial results, its managing director Colm Doherty signalled that mortgage rates would have to rise, describing the current retail banking environment in Ireland as 'quite dysfunctional'.
Earlier this year, AIB told brokers that it would no longer facilitate those wanting to switch their mortgages from another financial institution.
