Tag: Mortgage Rates

Advantedge Hikes IO Rates

Advantedge Financial Services (Advantedge) today announced it will increase the interest rate on all new and existing variable rate interest only home loans by 0.35% p.a., effective Tuesday 8 August 2017.

Advantedge is part of the National Australia Bank Group (NAB) and is Australia’s leading wholesale funder and distributor of white-label home loans.  

Australian Broker.  says from today, the interest rate on all new fixed rate interest only home loans will increase by 0.35% p.a.

These changes apply to both owner occupier and residential investor home loans, across all of Advantedge’s white label partners.

Brett Halliwell, general manager of Advantedge, said these changes will ensure Advantedge complies with regulatory requirements, including managing interest only lending for residential mortgages.

“Our products are highly competitive and delivered with exceptional service,” Halliwell said.

“Advantedge is focused on ensuring a positive customer and broker experience, and we continue to offer highly competitive variable rate special offers for new principal and interest lending.”

Currently, Advantedge is offering a special 3.74% p.a. principal and interest variable rate for new owner occupier borrowers, and 4.24% p.a. for new principal and interest investor borrowers. Eligibility criteria apply.

“We encourage all brokers to discuss with customers whether a principal and interest home loan may be more suitable for them,” Halliwell said.

Virgin Money unveils multiple rate changes

From Australian Broker.

Virgin Money has announced a raft of interest rate changes on its fixed and variable rate mortgage products.

Effective from today (7 July), Special Offer 2 year fixed and 3 year fixed rates will be available for new principal and interest, owner occupied and investment loans of more than $300,000 with LVRs of less than or equal to 90%.

For all Special Offer fixed rate loans, the interest rates are as follows:

Virgin Money will also be increasing its variable and fixed rates for new owner occupied loans for LVRs of over 90%. This change will also come into effect today (7 July) and will not affect applications with completed supported documents received prior to today.


Finally, Virgin Money will also be increasing its standard variable rates for owner occupied and investment interest online loans by 25 basis points, effective from 8 August.

The Virgin Money Interest Only Rate (Owner Occupied) will change to 4.89% p.a. while the Virgin Money Variable Investment Interest Only Rate (Investment) will become 5.19% p.a.

For new interest only customers, Virgin Money will be changing its rates as follows:

Auswide Bank Lift Some Mortgage Rates By 25 basis points

From Australian Broker.

Following a raft of changes announced by other lenders in recent weeks, Auswide Bank announced today an increase to reference rates for investment home loans and lines of credit.

Managing director Martin Barrett said the bank’s increase of 25 basis points from 11 July 2017 will result in a new standard variable rate (SVR) of 6.10%.

He said Auswide Bank continues to experience funding pressures and regulatory limits on investment and interest only lending.

“We’d prefer not to be increasing rates, but have limited options in the current environment which is the most challenging we have seen in sometime.”

Barrett said many investment loan customers pay discounted rates less than the standard variable rate based on the size of their loan.

ING Direct Joins The IO Rate Hike Dance

From Australian Broker.

ING Direct has announced is will be making a number of changes to variable rates across its home loan portfolio, effective Friday 7 July.

 

Reference rates for the following segments will change as follows:

  • For owner-occupier borrowers with ING’s Orange Advantage home loan, the principal and interest rates will decrease by 0.05% p.a.
  • For owner-occupier borrowers (with either an Orange Advantage or Mortgage Simplifier home loan), interest-only rates will increase by 0.20% p.a.
  • For investor borrowers (with either an Orange Advantage or Mortgage Simplifier), interest-only rates will increase by 0.35% p.a.

ING said it will waive any switching fees until the 31 August for existing customers with Interest Only loans wishing to switch to Principal and Interest repayments. With a Principal and Interest loan customers may be eligible for lower interest rates.

Bendigo Bank Hikes Some Mortgage Rates By 0.8%

From Australian Broker.

Bendigo Bank will adjust its mortgage pricing to address competitor movements and respond to regulatory caps on growth, after a decision made at its regular pricing committee meeting. Once again the move highlights that owner occupied principal and interest loans is the new battleground.

Managing director Mike Hirst said the changes reflect the requirement to meet the regulator’s expectations while responding to the ultra-competitive owner occupied mortgage pricing market for new lending.

“When setting interest rates our bank needs to consider many factors and carefully take into account the needs of our stakeholders including customers, shareholders, staff, partners and the broader community,” Hirst said.

“We’ve tried to carefully balance the interests of our mortgage customers, those who earn money through deposits and those who invest in our Bank, all while ensuring our pricing remains market competitive and provides the strategic springboard for accelerated growth.

“There is an intrinsic link between the profits our bank generates and the economic and social sustainability of the hundreds of communities in which we operate.  We value the continued commitment of our customers as we strive to grow our business in an extremely competitive market.

“We believe the changes announced today puts the bank in the best position to achieve this and ensuring we remain well below the 30 percent interest only settlements cap and 10 per cent growth limit for investor loans,” he said.

The following pricing changes will occur, effective Friday 14 July;

  • Variable interest rates will increase by 0.30% for existing owner occupied interest only customers and 0.40% for existing investment interest only customers
  • New business interest only variable rates will increase by 0.40% to 0.80% with fixed interest only rates increasing by 0.10% to 0.40%
  • New Business investment P&I variable rates will decrease by 0.15% with fixed P&I interest rates decreasing by up to 0.30 %

“We will also continue to waive the $625 application fee for all owner occupied purchases and external refinances that take out a Bendigo Connect P&I product,” Hirst said.

“Customers currently paying interest only repayments are encouraged to convert to principal and interest repayments. Where the customer meets the lending criteria, the application and settlement fees will be waived.

“We will continue to assess the market conditions and make any subsequent changes as required to maintain our competitiveness, balance our regulatory restrictions while supporting our customers and their communities,” he said.

ME Bank raises IO rates by 40 basis points

From Australian Broker.

ME today announced several changes across its home loan portfolio.

The Bank will decrease by 10 basis points its principal-and-interest variable home loan offer to new owner-occupier borrowers who are applying for a loan in a member package valued at $150,000 or more and with an LVR at 80% or less.

It will also increase by 40 basis points, all interest-only variable and fixed home loan offers to new borrowers.

Both these changes are effective Saturday 1 July.

ME will also increase by 40 basis points its reference rates on all existing variable interest-only loans. This change will affect existing customers in August.

The bank said the changes were being made to manage regulatory requirements on interest-only lending.

ME CEO Jamie McPhee said “the changes are necessary to ensure the Bank complies with macro-prudential measures introduced by APRA, while encouraging existing interest-only home loan borrowers to switch to principal-and-interest.

“Owner-occupier principle-and-interest home loan rates are at record lows. Now is a great time to pay down the principal on your home loan.

“ME does not apply a fee for switching from interest only to principal-and-interest.”

CBA Ups Interest Only Mortgage Rates

CBA changed their mortgage rates for owner occupied and investor mortgage holders from 7th July. This includes a significant hike for interest only.  They already tightened serviceability requirements a couple of weeks ago.  Principal and Interest Ower Occupied holders get a 3 basis point reduction! All this has, they say, nothing to do with the bank tax.

Commonwealth Bank recognises the importance of ensuring borrowers can sustain a strong path to property ownership and will be reducing our owner-occupier standard variable rate for those repaying principal and interest. From 7 July, customers paying off the home they live in will benefit from a lower standard variable rate of 5.22 per cent per annum, a reduction of three basis points.

Around 80 per cent of owner-occupier customers are repaying principal and interest, and these changes can help these borrowers own their home sooner. A customer with an average mortgage of $350,000 will save $78 a year.

We are supportive of the banking regulator’s moves to manage the level of growth and resiliency in the housing market. To meet our regulatory requirements, variable interest only home loan rates for owner-occupiers and investors will increase by 30 basis points.

Matt Comyn, Group Executive of Retail Banking Services, said: “Paying off your home is important for Australians. For owner occupier customers repaying principal and interest, they can take advantage of the interest rate reduction to pay off their home loan faster. These changes also help us keep the right balance in our home loan portfolio, in line with what our regulators require.”

Customers who currently make interest only payments are encouraged, where they are able, to switch to principal and interest repayments. Switching is easy and attracts no fees. Customers can make the change at no cost online, over the phone, or by speaking with a home lending specialist in branch.

These interest only changes are not in response to the bank levy that was announced as part of the Federal Budget in May.

The new rates will be effective from 7 July 2017.

Variable rates Current New from 7 July 2017  
Standard Owner-Occupied Principal and Interest 5.25% pa 5.22% pa -3bps
Standard Owner-Occupied Interest Only 5.47% pa 5.77% pa +30bps
Standard Investor Principal and Interest 5.80% pa 5.80% pa –
Standard Investor Interest Only 5.94% pa 6.24% pa +30bps

NAB hikes rates for IO loans

The rush to hike interest only loans continues, with NAB announcing changes which mirror the other majors. A small reduction in OO P&I loans but a big hike for IO loans for both OO and investors. Net impact will be further margin repair. No link with the bank levy they say.

From Australian Broker.

NAB has today announced changes to its variable home loan interest rates, effective Friday 30 June 2017.

The following three changes have been announced:

  • The interest rate for owner occupiers making principal and interest repayments will decrease by 0.08% per annum, to 5.24% per annum
  • The interest rate for owner occupiers making interest only repayments will increase by 0.35% per annum, to 5.77% per annum
  • The interest rate for residential investors making interest only repayments will increase by 0.35% per annum, to 6.25% per annum

NAB Chief Operating Officer, Antony Cahill, said the reduction to NAB’s Standard Variable Rate will benefit around 80 per cent of NAB’s owner occupier home loan customers.

“The 0.08% per annum decrease will see owner occupier customers making principal and interest repayments save $14 each month, or $168 each year, and help them to pay off their home loan sooner,” Cahill said.

“We need to comply with our regulatory requirements, including APRA’s 30% limit on new interest only lending for residential mortgages, while balancing the needs of customers across our entire portfolio and continuing to provide competitive rates.”

Cahill acknowledged the impact these changes will have on home loan customers making variable interest only repayments. Borrowers will not incur a fee to switch their repayments to principal and interest; customers are encouraged to discuss variations to their home loan with their banker or broker.

NAB continues to offer first home buyers a special 3.69% per annum, fixed for two years.

“We’re pleased to continue to help Australians, particularly young Australians, wanting to enter the property market to achieve their home ownership dreams,” Cahill said.

From Friday 30 June 2017, NAB’s advertised variable rates will be as follows:

Current advertised rates Advertised rate (Friday 30 June 2017)
Owner Occupier P&I 5.32% p.a. 5.24% p.a.
Investor P&I 5.80% p.a. 5.80% p.a.
Owner Occupier IO 5.42% p.a. 5.77% p.a.
Investor IO 5.90% p.a. 6.25% p.a.

NAB has said the changes announced today are unrelated to the Federal Government’s Major Bank Levy.

 

 

Westpac Ups IO Mortgage Rates

Westpac has lifted interest only mortgage rates by 34 basis points, whilst cutting principle and an interest rates by 8 basis points, effective 30 June. The bank says this has nothing to do with the Bank Tax which passed the Senate yesterday.

Effective on 30 June 2017, Westpac will reduce its variable rate interest rates for customers paying principal and interest on their owner occupier home loans by 8 basis points to 5.24% per annum (comparison rate 5.38% per annum*).

Westpac will also adjust interest only rates for variable home loans as follows:

  • Owner occupier interest only rate will increase by 34 basis points to 5.83% per annum (comparison rate 5.97% per annum*)
  • Residential investment interest only rate will increase by 34 basis points to 6.30% per annum (comparison rate 6.43% per annum*)

 

George Frazis, chief executive of Westpac Consumer Bank, said this is good news for owner-occupier customers who make principal and interest repayments as they will benefit from lower interest rates allowing them to pay off their loans faster.

“We hope the rate reduction will encourage owner-occupier customers with interest-only home loans to switch to principal and interest repayments, helping them to pay down their home loan in this low interest rate environment. There will be no switching fee,” he said.

“We understand the significance of interest rate changes to our home loan customers, so we try to balance the needs of both owner-occupiers and investors in making these decisions.

“APRA’s limit on new interest only lending is 30 per cent of new residential mortgage lending, so we have to continue to make changes to our interest-only rates and lending policies to meet this benchmark.

 

Interest-only rates surge across the board

From Mortgage Professional Australia.

Basic variable rates jump by almost 30 basis points as increasing number of borrowers go for fixed rate loans

Interest rates increased on 25 interest-only variable rate loans in the month of May alone, new data by comparison site Canstar has revealed.

Looking at investor IO loans, Canstar found the average basic variable rate IO loan had increased by 29 basis points and standard variable rates by 16 basis points. Just four IO products saw a rate reduction in the same period.

The rate rises are closely connected to a decision by APRA to cut down interest-only lending. In March the regulator warned lenders to limit new IO lending to 30% of their total residential mortgage lending, in addition to reducing IO lending at LVRs above 80%.

Interest-only lending may not be the only sector to see regulatory interference this year. In his letter to the banks, chairman Wayne Byres warned that “APRA continues to monitor the prevalence of higher-risk mortgage lending more generally. This includes lending at high loan-to-income ratios, lending at high LVRs, and lending at very long terms or with long interest-only periods (e.g. beyond five years).”

Fixing rates

The news comes on the same day that MyState Bank published a survey showing an increasing demand for fixed rate loans.

61% of broker surveyed had seen a growing number of customers moving to partially for fully-fix their interest rate, fearing rising rates. A quarter of brokers said more than half of their clients had done so.

MyState group executive broker distribution, Huw Bough observed that the “survey findings indicate that home owners are growing wary about the ability of banks to keep rates at their current levels in the short to medium term, despite a historically low official cash rate of 1.5%.”

Australia has not had a rate rise since 2010, although the decision by the US Federal Reserve last week to raise rates has raised expectations that the RBA might do the same. However, 74% of the 30 economists and experts convened by comparison site Finder.com.au predicted the next cash rate move would not occur until 2018.