Effective 1 August Regional lender Teachers Mutual Bank (TMB), along with its subsidiaries Unibank and Firefighters Mutual Bank, have announced a series of rate changes “in line with our regulatory obligations and current rates available across the market”. They say “Due to business and prudential requirements, we have placed restrictions on certain interest only home loans“.
Once again we see a differential shift, with interest only loan rates being lifted, whilst rates on some owner occupied principal and interest loans below specific LVR’s and value are reduced. This underlines the current behaviour where specific types of “low risk” borrowers are being recognised. Expect more of the same from other market participants.
This also means if you are the right type of borrower, there are some good rates available, whereas others, especially interest-only borrowers will not be so fortunate. We are seeing risk-based pricing emerging via the back door!
The bank increased the interest only variable rate by 20 basis points to 5.66% p.a. (comparison rate 5.71% p.a.). Interest only rates for the Solution Plus Home Loan rose by between 30 and 50 basis points depending on the LVR. Rates span between 4.49% p.a. (comparison rate 4.74% p.a.) and 4.67% p.a. (comparison rate 4.29%).
Rates for the principal & interest Solutions Plus Home Loan were decreased by 15 basis points to 4.39% p.a. (comparison rate 4.64% p.a.) for those borrowing between $240,000 and $499,999 where the LVR is greater than 80% and less than or equal to 90%.
