Non-major hikes rates by up to 18bps

Another non-major has increased its home loan interest rates as increased funding costs continue to put pressure on the banks.

ME will increase reference rates for all existing variable home loan customers by 18 basis points, effective from 7 February.

It will also increase its advertised variable rates for new customers by 8 basis points effective 4 February, following a 10 basis point increase to some new customer variable rates in December 2018.

ME CEO, Jamie McPhee, said “The changes are in response to the sustained increase in the cost of funds.

“Bank bill swap rates (BBSW), the key determinant of the cost of funds, have remained elevated.

“It was a difficult decision but we have sought the right balance between delivering a strong customer value proposition across our product range while responding to the sustained increase in funding costs.

“Even after these changes, ME’s variable reference rates remain lower than the major banks’ advertised variable reference rates.”

RateCity.com.au research director Sally Tindall said it’s disheartening to see ME Bank decide to charge its loyal customers more than its new ones.

“ME Bank is clearly under funding pressures, like the other banks, however, they’ve still got one eye focused on getting new customers in the door.”