Virgin Money breaks with rivals by cutting interest-only mortgage rates
Virgin Money has cut interest-only rates as other lenders hike rates on the products.
Effective from today, the lender has trimmed fixed interest-only home loan rates for both owner-occupiers and investors. Virgin Money has cut the rates by 10-30 basis points.
| Old rate | New rate | Reduction | |
|---|---|---|---|
| 1 year fixed | 4.39% | 4.39% | None |
| 2 year fixed | 4.39% | 4.19% | 0.20% |
| 3 year fixed | 4.49% | 4.39% | 0.10% |
| 4 year fixed | 4.69% | 4.39% | 0.30% |
| 5 year fixed | 4.79% | 4.49% | 0.30% |
| Old rate | New rate | Reduction | |
|---|---|---|---|
| 1 year fixed | 4.49% | 4.49% | None |
| 2 year fixed | 4.49% | 4.39% | 0.10% |
| 3 year fixed | 4.49% | 4.39% | 0.10% |
| 4 year fixed | 4.89% | 4.59% | 0.30% |
| 5 year fixed | 4.99% | 4.69% | 0.30% |
The cut comes amid interest-only rate hikes from other lenders. In April of this year, ANZ hit borrowers with a hike to interest-only rates while cutting rates for principal and interest borrowers. June and July saw NAB, Westpac and Commonwealth Bank all follow suit.
Virgin's rate cuts put their owner-occupier products under the Australian average for home loan rates for September 2017. The current average interest rates for fixed-rate products across the market this month are as follows:
- 1 year fixed: 4.43%
- 2 year fixed: 4.38%
- 3 year fixed: 4.46%
- 5 year fixed: 4.88%
Compare the latest mortgage rates
Lenders have been raising rates on the loans to deter borrowers as they try to work toward a cap on interest-only lending instituted by the Australian Prudential Regulation Authority (APRA). APRA told banks earlier this year that new interest-only lending should be capped at 30% of all new lending and handed the banks a September deadline.
Recent CoreLogic research suggested that interest-only lending was dropping sharply, but that lenders had work to do to get below the 30% cap.
If you want to look in a competitive fixed rate before the next rate rise, check out our range of fixed-rate loans. If you're looking to refinance to a better loan, we have plenty of refinancing options too.
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