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AIB to finance development of 10,000 homes this year as demand increases

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AIB chief executive Colin Hunt
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AIB chief executive Colin Hunt

AIB is expecting to finance developments which will build more than 10,000 homes in the current year, up from 8,200 last year.

"That is a pretty significant increase in the volume of homes that we are building around Ireland," chief executive Colin Hunt told the Sunday Independent. Based on the current pipeline, more than 1,000 of the homes will be social housing units.

Hunt said that demand for homes would continue, even if the coronavirus or Brexit had a negative impact on the economy.

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"If you go back to the last peak, when we were heading into the last recession, housing output was more than 95,000 units. This time around we are delivering just over 20,000 units. We're under-supplying the market.

"So regardless of the near-term path of the economy, people are still going to need homes to live in," he said.

Hunt also said that the bank is keeping interest rates for deposit accounts under review. There is an expectation that the ECB may further cut interest rates this week in response to the coronavirus outbreak. This will heighten speculation that Irish banks may begin to charge SMEs and ordinary savers for keeping money on deposit.

"We have been working in the last 18 months to apply negative interest rates to our very, very largest customers. To date that has been limited. That has been to what we call non-bank financial institutions, and to the very largest corporates and large professional service firms.

"And we haven't applied them to a broader swathe of customers than that. But like our mortgage products we keep all our products under constant and ongoing review and that remains very much the case.

"We have a regular meeting of our pricing committee which looks at the price of all our products in the market and that is no different on the deposit side than it would be on the mortgage side."

He said AIB had already introduced reductions on fixed mortgage rates due to the current interest rate environment.

"Our interest rates on borrowing products already reflect the fact that we are dealing with a very, very low interest rate environment. Obviously the bank does have a cost imposed on us given our loans-to-deposit ratio. It does have a cost imposed on us from having surplus deposits which we deposit at the European Central Bank."

Sunday Indo Business

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