AIB has announced a second increase on its fixed mortgage rates in two months after increasing the rates by 0.5 percentage points in October.

The bank will increase fixed rates for new mortgages across its AIB, EBS and Haven brands by another 0.5 points.

AIB was the first Irish lender to increase mortgage rates after the European Central Bank (ECB) increased interest rates by a total of two points between July and October, but was soon followed by Bank of Ireland and Permanent TSB.

The changes will not affect existing fixed-rate mortgage holders with the bank or those on variable rates. Borrowers on tracker mortgages have already seen their rates increase in line with the ECB changes.

AIB said customers with mortgage approval who drawn down their home loan by 16 January will avail of their agreed rate. More than half of AIB mortgage customers pay a fixed rate on repayments.

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The ECB is expected to further increase its main lending rate in the coming months as eurozone inflation, which hit 10.6% in October, continues to outpace the target rate of 2%.

AIB's five-year fixed rate will increase to 3.45% for customers borrowing 80% of the value of the property, while the rate on the bank's one-year fixed term deposit product will double to 0.5% for customers with balances of greater than €15,000.

AIB moved its full-year net interest income growth forecast from 10% to 15% last month on the back of rising rates, with the bank no longer being charged for deposits with the ECB. The lender is due to set out new profitability targets next week.

Bank of Ireland raised fixed rates by 0.25 points earlier this month, and PTSB increased fixed rates by 0.45 points last week.

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