Seven lenders increase rates in one week

Australia's largest member-owned bank announced the highest increase

Seven lenders increase rates in one week



Seven lenders announced mortgage rates changes over the week ending 20 August, according to latest data from Canstar. In total, changes were made across more than 35 products.

Heritage bank was recorded making changes to its owner occupier and investment home loan products, changing its fixed rate products by decreases of 10 basis points to increases of 14 basis points. Heritage also recorded decreasing its Investment Discount Variable product by 10 basis points to a rate of 4.14%.

Meanwhile, Greater Bank increased both its owner occupier and investment variable rate products by 9 basis points. Goldfields Money reduced the standard home loan rate of its owner occupier product from 4.75% to 4.49%, and IMB dropped its accelerator - owner occupied 2 years rate from 3.82% to 3.59%. Community First CU lowered its “Accelerator Home Loan Inv True Value Var Hl - P&I 250k+” rate from 4.67% to 3.99%.

The average basic variable rates for the past week were:

  • Owner Occupier P&I Home Loans: 4.17%
  • Owner Occupier IO Home Loans: 4.64%
  • Investment P&I Home Loans: 4.58%
  • Investment IO Home Loans: 4.88%

However Australia’s largest member-owned bank CUA, made the largest increase, with interest rates up .25 percentage points across more than 20 products.

The increase applies to more than twenty P&I and interest-only variable home loan products, including the fresh start basic variable P&I which is now 4.32% (comparison rate 4.33%) for owner occupiers and 5.08% (comparison rate 5.13%) for investors.

It is an increase that Canstar group executive of financial services Steve Mickenbecker described as  having the potential to become “a way of life”.

“The CUA move goes beyond what we have been seeing, and at 0.25% is the sort of increase that could become a way of life when the Reserve Bank eventually starts the upward move in the cash rate,” he said.

The bank’s chief sales officer, Paul Lewis said the rate hikes were not made lightly but were necessary given funding costs were expected to remain high in the coming year.

“CUA has absorbed these costs to date and we’ve delayed passing these costs on to borrowers. But over recent months, we’ve seen many other lenders have already reviewed interest rates in light of these higher funding costs.”

The Reserve Bank of Australia’s cash rate is currently at a historic low of 1.5% for a record 24th consecutive month, as the central bank has kept an unchanged economic growth forecast at a little over 3% in 2018 and 2019.

“Despite housing market headwinds from tighter credit conditions, the prospect of mortgage rates remaining reasonably stable should help to keep a floor under housing demand,” CoreLogic head of research Tim Lawless said in a statement.

CoreLogic data show that while the cash rate has remained unchanged for two years, the average standard variable mortgage rate has actually reduced by 5 basis points for owner occupiers and increased by 30 basis points for investors.



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