Virgin Money breaks with rivals by cutting interest-only mortgage rates

Adam Smith 19 September 2017

dice percent1Virgin 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 rateNew rateReduction
1 year fixed4.39%4.39%None
2 year fixed4.39%4.19%0.20%
3 year fixed4.49%4.39%0.10%
4 year fixed4.69%4.39%0.30%
5 year fixed4.79%4.49%0.30%
Old rateNew rateReduction
1 year fixed4.49%4.49%None
2 year fixed4.49%4.39%0.10%
3 year fixed4.49%4.39%0.10%
4 year fixed4.89%4.59%0.30%
5 year fixed4.99%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.

Latest home loans headlines

Image: Shutterstock

Get more from finder

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, read the PDS or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.
Ask a question
Go to site