AIB Bank has this afternoon contacted mortgage brokers to inform them of changes to the structure of its commission arrangements. This is due to the continuing high cost of funds in the financial markets and the resulting margin erosion in AIB's mortgage business.
Today, the 3-month Euribor inter-bank rate hit a new 2008 high of 4.829% - more than 3 typical European Central Bank interest rate increases above the ECB's benchmark rate of 4%. Before of the outbreak of the credit crisis last August, the key 3-month rate would generally be 0.150% above the benchmark rate.
Euribor Rates
With effect from close of business on Friday 25th April, commission payable by AIB to brokers will be 0.5% of the mortgage amount drawn. Previously the commission payable was up to 1%. Also, AIB's current commission clawback period of 2 years is being extended to 3 years.
Ulster Bank has already announced that it plans to cease using mortgage brokers in May.
