AIB is to increase the interest rate it charges for new fixed rate mortgages by another 0.5%.

It is the second rate increase by the bank since October when it also increased fixed rates for new home loans by 0.5%.

The changes, which take place from close of business today, will not affect existing fixed rate mortgage holders with the bank or those with variable rates.

Borrowers with tracker mortgages have already seen their rates increase in line with European Central Bank changes.

The move follows three rate increases since July by the ECB, bringing its main lending rate to 2%.

AIB says that customers who draw down their mortgage by 16 January 16 will be able to avail of previous rates.

The increase will apply to AIB mortgages as well as those from the group's EBS and Haven brands.

According to AIB more than half of its mortgage customers are on a fixed rate mortgage.

The increases are the latest of a slew by the main banks here in recent weeks.

The most recent announcement came yesterday, when Ulster Bank said it was increasing its fixed rates on certain mortgages.

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Further rate increases are expected from the ECB in the coming months, with a rise of as much as 0.75% anticipated next month.

AIB will also launch a one year fixed term deposit product offering a rate of 0.5% for personal and business customers with deposit balances of greater than €15,000.

This represents an increase on the previously announced fixed term deposit rate of 0.25%, the bank said.