AIB is hiking its mortgage interest rates and those of its subsidiaries. Variable rate customers at AIB will see their rate increase by 0.4% from June.

Those with variable rate homeloans from EBS and Haven will have to pay an extra 0.25%. In a statement AIB says it does not anticipate any further rate hikes this year.

Meanwhile EBS and Haven variable mortgage rates will increase by up to 0.25% from June 1st.

It says the decision to raise variable rates "is driven by the need to ensure the Bank is lending at long term sustainable pricing levels".

'Driven by a number of factors'

The bank says its variable rates have been at unsustainable levels relative to the cost of funding for several years, while EBS has not announced an increase in almost 2 years.

It says the cost of funding the group is driven by a number of factors, including wholesale funding costs and deposit pricing.

It adds that following this increase, AIB, EBS and Haven rates will be in line with pricing in the Irish market.

AIB Director of Products Fergus Murphy said "Prior to this increase, AIB had the lowest standard variable rate in the market, but now regrettably must move more in line with market competitors. While AIB and EBS recognise that any increases are unwelcome for customers, we must ensure that mortgages are provided at a sustainable pricing level."