ME on Friday raised certain owner occupier fixed home loan interest rates by up to 30 basis points after they were reduced in late March.
As a pinch and a punch for the first day of the month, ME raised its fixed owner occupier home loans for one, two and three years paying principal and interest (P&I) by between 10 and 30 basis points.
The rates are now:
- Flexible Fixed 1 Year: 10 basis point rise to 2.54% p.a. (4.17% p.a. comparison rate*)
- Flexible Fixed 2 Years: 30 basis point rise to 2.64% p.a. (4.03% p.a. comparison rate*)
- Flexible Fixed 3 Years: 30 basis point rise to 2.74% p.a. (3.93% p.a. comparison rate*)
ME's packaged loans also received the same treatment, and to get the most competitive rates borrowers must have a minimum 20% deposit i.e. 80% LVR.
This represents a partial reversal of ME's decision on 26 March to slash rates by up to 134 basis points as a discount spurred on by coronavirus.
At the time, ME CEO Jamie McPhee said that by offering its lowest ever suite of fixed rate home loan packages, ME was helping borrowers to reduce their repayments during this difficult time.
“Fixed rates provide borrowers with repayment certainty," Mr McPhee said.
"By offering record-low 1-, 2- and 3-year fixed rates and competitive rates across a range of other terms, borrowers can achieve peace of mind by locking in a historically low repayment to help them through this challenging period.”
On the decision to hike a number of fixed rates last week, a ME spokesperson told Savings.com.au it's "all just the usual adjustments in market position."
However, ME did cut rates on its owner occupier fixed four year loans by 10 basis points, and by 20 basis points for five year fixed terms.
Additionally, even with the rate hike, ME's fixed home loan rates are still very competitive, and are comparable to variable home loan rates, as seen below.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) owner-occupied home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
Other home loan rate cuts
Marketwide, again, the bulk of cuts were made to fixed loan products.
CUA cut its one and two year fixed investor loans paying P&I (principal and interest) by up to 101 basis points (more details below) in the past week.
Larger cuts by up to 140 basis points were made to CUA's interest only (IO) loans as well, but for the sake of comparison we'll look solely at P&I products.
Other lenders to cut in the past week include Hume Bank, UBank, ME Bank, Sydney Mutual, and Endeavour Mutual, continuing the narrative of customer-owned banks cutting.
Cuts were made primarily to investment home loans, fixed between one and five years, and include:
- 1 Year Fixed Investor P&I: 101 basis point cut to 2.69% p.a. (4.82% p.a. comparison rate*)
- 2 Year Fixed Investor P&I: 101 basis point cut to 2.69% p.a. (4.62% p.a. comparison rate*)
- 3 Year Fixed Investor P&I: 45 basis point cut to 2.69% p.a. (4.44% p.a. comparison rate*)
- 5 Year Fixed Investor P&I: 71 basis point cut to 2.99% p.a. (4.23% p.a. comparison rate*)
Hume Bank made a wide variety of cuts across both owner occupier and investment loans. Key cuts are below:
- 2 Year Fixed Intro P&I 70%: 65 basis point cut to 2.29% p.a. (4.06% p.a. comparison rate*)
- First Home Starters Package 2 Year Fixed Intro 150k+: 20 basis point cut to 2.39% p.a. (3.87% p.a. comparison rate*)
And for investors...
- Investment P&I Fixed 1 Year: 20 basis point cut to 2.99% p.a. (4.85% p.a. comparison rate*)
- Investment P&I Fixed 2 Years: 40 basis point cut to 2.79% p.a. (4.63% p.a. comparison rate*)
- Investment P&I Fixed 3 Years: 40 basis point cut to 2.79% p.a. (4.46% p.a. comparison rate*)
UBank was another lender that cut fixed investment loans - this time by up to 50 basis points.
- Inv UHomeLoan Fixed 1 Year P&I: 45 basis point cut to 2.44% p.a. (3.57% p.a. comparison rate*)
- Inv UHomeLoan Fixed 3 Year P&I: 40 basis point cut to 2.44% p.a. (3.30% p.a. comparison rate*)
- Inv UHomeLoan Fixed 5 Year P&I: 50 basis point cut to 2.74% p.a. (3.26% p.a. comparison rate*)
Sydney Mutual Bank & Endeavour Mutual Bank
Have a Captain Cook of Endeavour's home loan rate cuts, as well as Sydney Mutual's - the two mutual banks merged in 2019 and feature many of the same products.
- Investment Fixed P&I 1 Year: 35 basis point cut to 2.69% p.a. (3.46% p.a. comparison rate*)
- Investment Fixed P&I 2 Year: 35 basis point cut to 2.69% p.a. (3.40% p.a. comparison rate*)
- Investment Fixed P&I 3 Year: 35 basis point cut to 2.64% p.a. (3.32% p.a. comparison rate*)
- Investment FIxed P&I 5 Year: 35 basis point cut to 3.19% p.a. (3.42% p.a. comparison rate*)
And for owner occupiers looking for a variable rate:
- Basic Variable Home Loan: 10 basis point cut to 2.87% p.a.(2.93% p.a. comparison rate*)
- First Home Buyer Basic: 10 basis point cut to 2.87% p.a. (2.90% p.a. comparison rate*)
- First Home Buyer Standard: 10 basis point cut to 2.97% p.a. (3.00% p.a. comparison rate*)
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): Credit Union Australia, 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.
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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