ING the latest bank to lift long-term fixed mortgage rates

author-avatar By on May 26, 2021
ING the latest bank to lift long-term fixed mortgage rates

ING has made several changes to fixed rate home loans today, with some terms seeing interest rate cuts and others seeing increases.

According to ING, residential fixed home loan interest rates have been increased by up to 80 basis points across its Standard and Orange Advantage products, while others have been decreased by as much as 35 basis points. 

Investor, interest-only and variable-rate loans have not been changed. 


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

ING fixed rate increases

The biggest of the changes made by ING apply to its longer-term fixed mortgages for four and five years. 

In particular, interest rates for borrowers with small deposits of 5% to 10% have been increased by 75 and 80 basis points:

  • Orange Advantage Residential Fixed 4 yrs 90-95%: Increased by 80 basis points to 2.89% p.a (3.72% p.a comparison rate*)
  • Orange Advantage Residential Fixed 5 yrs 90-95%: Increased by 75 basis points to 3.04% p.a (3.70% p.a comparison rate*)
  • Residential Fixed 4 yrs 90-95%: Increased by 80 basis points to 2.99% p.a (3.76% p.a comparison rate*)
  • Residential Fixed 5 yrs 90-95%: Increased by 75 basis points to 3.14% p.a (3.74% p.a comparison rate*)

For those with deposits between 10% and 20%, fixed interest rates on these loans are now up to 35 basis points higher. 

The changes applying to 20% deposit loans can be seen below: 

  • Orange Advantage Residential Fixed 4 yrs ≤ 80%: Increased by 35 basis points to 2.34% p.a (3.54% p.a comparison rate*)
  • Orange Advantage Residential Fixed 5 yrs ≤ 80%: Increased by 30 basis points to 2.49% p.a (3.48% p.a comparison rate*)
  • Residential Fixed 4 yrs ≤80%: Increased by 25 basis points to 2.44% p.a (3.38% p.a comparison rate*)
  • Residential Fixed 5 yrs ≤80%: Increased by 20 basis points to 2.59% p.a (3.52% p.a comparison rate*)

These increases to four and five year fixed home loan rates are just the latest in a broader trend seen in the past several months, which Savings.com.au has closely tracked. 

Commonwealth Bank moved to increase select four-year fixed rate home loans by up to 20 basis points in March, while another major bank Westpac also lifted four and five-year fixed mortgage rates by 30 basis points in late April. 

Earlier this month, NAB raised rates on a few four- and five-year fixed loans by up to 25 basis points. 

Other longer-term rate changes made recently include those by the likes of Citi, Bankwest, Newcastle Permanent, and Greater Bank, just to name a few. 

ING fixed rate cuts 

While ING has followed the trend of increasing interest rates on longer fixed terms, it has also lowered the interest rate on shorter fixed terms from one to three years. 

While major banks might have raised four and five year fixed rates as mentioned above, they also lowered the cost of various shorter fixed loans. 

For example, Commbank also lowered interest rates on some of its shorter fixed-terms (two-years), as did NAB by 15 basis points

In March, Westpac cut to its 'lowest ever' fixed home loan rate for two-year fixed loans.

Today, ING has cut its own one to three-year fixed mortgage rates by up to 35 basis points, again differing depending on the loan and deposit size. 

For would-be customers with 20% deposits or more:

  • Orange Advantage Residential Fixed 1 yr ≤ 80%: Cut by 15 basis points to 2.04% p.a (3.94% p.a comparison rate*)
  • Orange Advantage Residential Fixed 2 yrs ≤ 80%: Cut by 25 basis points to 1.84% p.a (3.73% p.a comparison rate*)
  • Orange Advantage Residential Fixed 3 yrs ≤ 80%: Cut by 15 basis points to 1.89% p.a (3.56% p.a comparison rate*)
  • Residential Fixed 1 yr ≤80%: Cut by 25 basis points to 2.14% p.a (3.94% p.a comparison rate*)
  • Residential Fixed 2 yr ≤80%: Cut by 35 basis points to 1.94% p.a (3.74% p.a comparison rate*)
  • Residential Fixed 3 yr ≤80%: Cut by 35 basis points to 1.99% p.a (3.59% p.a comparison rate*)

For new customers with a deposit below 10%, interest rates have been increased by as much as 30 basis points rather than decreased.

Auswide bank cuts variable rates 

A smaller bank, Auswide, has made some slightly different interest rate changes, chopping Basic Home Loan and Freedom Package variable rates by up to 30 basis points for both investors and owner occupiers. 

Variable rate changes have been more uncommon compared to fixed rates in recent months, although significant recent variable rate cuts include those made by Aussie (up to 35 basis points) and Tic:Toc (15 basis points).

Some of these key changes made by Auswide Bank include the following:

  • Basic Home Loan ≤75%: Cut by 30 basis points to 2.09% p.a (2.11% p.a comparison rate*)
  • Basic Home Loan 75-90%: Cut by 25 basis points to 2.49% p.a (2.51% p.a comparison rate*) 
  • Freedom Package Variable P&I 75-90% Special: Cut by 20 basis points to 2.79% p.a (3.21% p.a comparison rate*)
  • Basic Investment Loan IO 75-90%: Cut by 25 basis points to 2.89% p.a (2.91% p.a comparison rate*)
  • Basic Investment Loan P&I 75-90%: Cut by 25 basis points to 2.69% p.a (2.71% p.a comparison rate*)
  • Freedom Package Investment Variable P&I 75-90% Special Offer: Cut by 20 basis points to 2.99% p.a (3.40% p.a comparison rate*)

Auswide Bank had previously cut rates on some of these loans by as much as 45 basis points back in February. 

What explains this trend in interest rate changes? 

As explored by Savings.com.au, the looming end of the RBA's Term Funding Facility (TFF) in June is thought to be a major reason why longer-term fixed interest rates are rising while comparatively fewer shorter fixed loans and variable loans have been changed. 

Once that $200 billion in cheap funding disappears, mortgage "incentives" will disappear and rates will rise further, according to CFO of non-bank lender Firstmac James Austin.

"New mortgage rates will start to rise. In fact we are already seeing this to some extent," he said.

"The cheap fixed rate offers of the banks will slowly be removed over the next few months, and the current cash upfront incentives paid by banks will disappear."

Four and five-year fixed rates are being increased in particular because the Reserve Bank board has reiterated that the cash rate will not be raised before 2024. 

Locking customers into a higher-rate loan over five years could be quite lucrative for them. 

AMP chief economist Dr Shane Oliver however has said fixed loans can still be a viable option, and recommends considering a split-loan

"Fixed rates are generally well below variable rates and so the interest saving should be taken advantage of, particularly if the savings are used to pay down the mortgage principal faster," he told Savings.com.au in early April

"A sensible approach is to leave some variable though to provide some flexibility."


Photo by Noah Buscher on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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