ME lifts interest-only home loan rates

Adam Smith 30 June 2017 NEWS

More rate changes from banks concept imageNon-major banks are following the Big Four’s lead in hiking interest-only rates.

ME announced today it would raise interest-only rates by 40 basis points for new variable and fixed rate customers from 1 July. It will also raise interest-only rates by 40 basis points for existing variable rate customers from August.

The rate move follows similar moves from Westpac, NAB and Commonwealth Bank, who have all lifted interest-only rates while cutting principal and interest rates.

Along with the interest-only rate hike, ME said it would decrease principal and interest variable rates by 10 basis points for new borrowers applying for a member package loan of $150,000 or more and a loan-to-value ratio of 80% or less.

“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,” ME chief executive Jamie McPhee said. “Owner-occupier principal and interest home loan rates are at record lows. Now is a great time to pay down the principal on your home loan.”

ME said there would be no fee for customers switching from interest-only to principal and interest loans.

Image: Shutterstock

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