Mortgage rate hikes continue, with UBank and Virgin Money raising some rates by 20 basis points
BankWest and BankVic have actually lowered some of their mortgage rates.
UBank today raised rates on some of its interest only investor loans by 20 basis points. It's joined by Virgin Money, which is raising rates on multiple Reward Me home loans.
Bank of Queensland made the news last week when it announced it was increasing selected interest rates in order to deal with rising funding costs. This was a common explanation for a string of rate rises last year.
And now it looks to be an early trend in 2019.
Who's raising rates?
UBank raised its 1, 3 and 5 year fixed investor interest only rates by 20 basis points today.
- UBank UHomeLoan – 1 Year Fixed Rate (Investor, IO). Old rate: 3.99%. New rate: 4.19%.
- UBank UHomeLoan – 3 Year Fixed Rate (Investor, IO). Old rate: 3.99%. New rate: 4.19%.
- UBank UHomeLoan Fixed – 5 Year Fixed Rate (Investor, IO). Old rate: 4.49%. New rate: 4.69%.
Virgin Money raised rates for new lenders on multiple Reward Me home loans, between 5 and 20 basis points last Friday.
- Virgin Reward Me Variable Home Loan – LVR <= 80% ($750k+ Owner Occupier, P&I). Old rate: 3.64%. New rate: 3.69%.
- Virgin Reward Me Variable Home Loan – LVR >90% ($500k to $750k Owner Occupier, P&I). Old rate: 4.84%. New rate: 5.04%.
Bank of Queensland
This lender kicked off the latest round of rate moves last week, raising owner occupier and line of credit rates by 11 to 18 basis points last Friday.
Crunching the numbers
A 20 basis point rate rise can increase your mortgage repayments significantly. Here's an example calculation:
- The average Australian home loan size (according to the latest ABS statistics): $386,300
- Loan term: 30 years
- Interest rate: 3.80%
- Monthly repayment = $1,799
But if your rate went up by 20 basis points it would look like this:
- Interest rate: 4.00%
- Monthly repayment = $1,844
That's an extra $540 a year and enough to put serious strain on some borrowers.
But it's not all rate hikes. Bankwest and BankVic have actually lowered interest rates in the past week.
- Bankwest Complete Home Loan Package Fixed – 2 Year Fixed Rate LVR <90% (Owner Occupier, P&I, $200k+). Old rate: 3.88%. New rate: 3.75%.
BankVic lowered a range of fixed rate products by 5 to 20 basis points.
With the Reserve Bank not meeting until February and funding costs continuing to weigh on lenders, we can expect a lot more rate movements up and down over the coming month. As always, borrowers need to keep an eye on their mortgage rate and switch to a lower one. The savings can quickly add up to thousands of dollars.