It marks the fourth time this year that the bank has made a mortgage rates announcement.
Rivals Bank of Ireland, PTSB and Avant Money are likely to respond with rates moves.
AIB has already cut its rates three times this year, and is now introducing two short-term green rates.
Green rates are lower than conventional mortgage rates and are for homeowners with highly energy efficient homes.
The bank is offering a green three-year fixed rate for homes with a Building Energy Rating (BER) between A1 and A3, with rates from as little as 3pc.
From this weekend, it is also offering a green two-year fixed rate for homes with a BER of between A1 and B3, starting from 3.15pc.
These are new products are AIB’s lowest available mortgage rates.
The new rates are available to new and existing customers from this Saturday.
Today’s News in 90 seconds – 25th October 2024
Switcher customers who meet the criteria and want to avail of one of these fixed rates will also benefit from AIB’s €3,000 switcher cash offer, the bank said.
Along with the new rates, AIB has recently extended its approval-in-principle period from six to 12 months, giving more time for customers to find and buy their new home.
AIB’s managing director, retail banking, Geraldine Casey said: “These two new AIB Green Fixed rates are our lowest mortgage rates and offer the security of a fixed rate combined with value.
“They are available to customers who are buying or building a home with an energy rating of A1 to A3 or A1 to B3.”
Ms Casey said that rates as low as 3pc mean customers can save over €380 a year, when compared to AIB’s existing green five-year fixed rate.
The bank has cut its green rates a number of times this year.
There are no reductions in the rates of the bank’s Haven and EBS subsidiaries.
In September, AIB reduced its green five-year fixed rate mortgage by 0.25 percentage points, available for homes with a BER rating between A1 and B3.
And it cut its four-year fixed rate mortgage for all customers borrowing €250,000 or more.
The green rates are likely to mean some of the more than 35,000 homeowners who upgraded their homes so far this year can avail of them, according to figures from the Sustainable Energy Authority of Ireland.
Last year some 48,000 retrofit grants were paid out.
AIB said that people who have retrofitted their homes since they drew down their original mortgage may also now qualify for a green mortgage rate.
It comes weeks after a second cut in European interest rates announced by the European Central Bank this month.
A third rate cut this year is expected from the ECB on December 12 next.
Leading mortgage broker Michael Dowling of Dowling Financial in Dublin said the fixed rate reductions announced by AIB are very welcome news, particularly for first-time buyers purchasing news homes.
A three-year fixed rate green from 3pc is the cheapest rate available on the market, he said.
This represents a €33 per month reduction on a €300,000 mortgage from the current AIB offering.
But Mr Dowling questioned why AIB was not cutting the EBS or Haven mortgage rates.