Aussie hikes home loan rates

by Rebecca Pike15 Feb 2019

Aussie Home Loans has become the fourteenth lender to increase variable rates, as lenders continue to struggle with wholesale funding costs rising.

The hikes came in from yesterday, (14 February), and effect variable rates for owner occupiers and investors.

The owner occupier variable rate for Aussie IQ loans with principal and interest repayments will increase by 0.06%, while those with interest only repayments will increase by 0.16%.

Investment variable rate loans with principal and interest and interest-only repayments will increase by 0.16%.

At the same time the group announced a cut of up to 40 basis points for owner occupier four- and five-year fixed loans.

According to Canstar’s group executive of financial services, Steve Mickenbecker, these changes mean existing borrowers are now having to add an extra $14 to the monthly repayment for a $400,000 loan over 30 years.

He added, “Fixed rates have been left unscathed, without rates rises, so that new borrowers choosing to fix will not be hit by an increase.

“Investors and interest only borrowers will be up for a bigger increase of 0.16%, which is a little surprising given the relaxation of APRA lending caps. However, with fixed rate rates not increasing, Aussie is maintaining its competitive settings in the market for new borrowers.

“There are reductions up to 0.40% for some fixed rate loans at the longer end of the maturity range, 4 and 5 years, one benefit of an inverse yield curve in the US.

“The differential between 2 year and 5 year fixed rates is as little as 0.10% for some classes of borrowers, as flat as you would ever imagine, and giving an opportunity to lock in repayments for the medium for borrowers nervous that the rate rises will continue.”