Photo by Tierra Mallorca on Unsplash
Major online lender, Me Bank has slashed its three-year fixed home loan to its lowest ever rate.
The cut of 40 basis points to 3.18% p.a. (3.87% p.a. comparison rate) is the third rate cut by ME Bank since the Reserve Bank first lowered the cash rate in June.
Suncorp also announced it had dropped its two and three-year fixed rates, effective from Friday 2nd August.
Me Bank fixed rate changes
ME’s three-year fixed rate is available to home loan customers with a Member Package for owner-occupiers paying principal and interest with a loan to value ratio (LVR) less than 90%.
- Three-year owner-occupied, principal and interest loans with an LVR less than 80% reduced by 40 basis points, from 3.58% p.a to 3.18% p.a (comparison rate 3.87% p.a.*)
- Three-year owner-occupied, principal and interest loans with an LVR greater than 80% and less than 90% reduced by 40 basis points, from 3.58% p.a to 3.18% p.a (comparison rate 4.19% p.a.*)
Suncorp fixed rate changes
- Two-year base standard P&I fixed rates have been cut by 10 bps from 3.64% p.a. to 3.54% p.a. (5.22% p.a. comparison rate*)
- Three-year base standard P&I fixed rates have been cut by 20 bps from 3.64% p.a. to 3.44% p.a. (5.04% p.a. comparison rate*)
- Two-year base standard interest-only fixed rates have been cut by 10 bps from 4.14% p.a. to 4.04% p.a. (5.66% p.a. comparison rate*)
- Three-year base standard interest-only fixed rates have been cut by 10 bps from 4.14% p.a. to 4.04% p.a. (5.52% p.a. comparison rate*)
Serviceability rate cuts
ME Bank also unveiled the banking industry’s lowest serviceability rate to date at 5.25%.
The online lender also boosted its “buffer” to 2.5%, meaning the serviceability rate which mortgage applicants with ME will be assessed at will be the higher of:
- 5.25% (the new rate floor), or
- 250 basis points above the loan’s interest rate (the 2.5% buffer)
The move comes after the Australian Prudential Regulation Authority’s (APRA) decision in July to remove the serviceability interest rate floor, which required banks to assess all borrowers against their capacity to repay a loan at an interest rate of at least 7.00%.
Macquarie Bank previously held the lowest serviceability rate at 5.30%.
Last month, Suncorp also announced that that it would cut its interest rate floor for mortgage serviceability assessments from 7.25 per cent to 5.5 per cent and increase its buffer from 2.25 per cent to 2.5 per cent.
*Comparison rate includes both the interest rate and the fees and charges relating to a loan, combined into a single percentage figure. The interest rate per annum is based on a loan credit of $150,000 and a loan term of 25 years.
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