BOQ continues interest only rate rise trend in home loan market
Bank of Queensland has jumped on a growing trend to raise rates across its range of interest-only loans, while also reducing rates for customers making principal and interest repayments.
Effective from August 8, interest only loans from BOQ will increase by 0.40%, bringing the current standard variable rate for owner-occupiers up from 5.61%, to 6.01%.
According to Mozo’s home loan comparison calculator, on an interest only mortgage of $500,000 over a 25 year term, this change would mean an extra $166 a month in interest, or an extra $50,000 over the life of the loan.
Borrowers making principal and interest repayments on the other hand, will enjoy a rate cut of 0.10%, bringing the standard variable rate down to 5.51%. On the same home loan as in the example above, this represents a saving of $12,500 over the life of the loan.
The changes fall in line with a recent trend of lenders hiking interest only loans while lowering rates on principal and interest rates. All four big banks, plus other lenders such as ING Direct have done so, in an effort to remain within APRAs new tighter restrictions on “risky” lending.
Jason Stephens, General Manager of BOQ Retail Banking Branch Network, also said the new regulatory requirements were the driving force behind home loan rate changes.
“Today’s decision to increase rates for customers paying interest only reflects ever-changing market conditions in light of recent regulatory changes, which are designed to help manage the level and growth of interest only home loans in Australia and help boost the sustainability of our home loan market,” he said.
Also in line with action taken by other lenders, BOQ is waiving the switching fee for customers who want to transfer their loan from interest-only repayments to Principal and Interest until the end of September this year.
But just switching repayment type isn’t the only way Aussie borrowers can save on their mortgage. If you’ll be reevaluating your home loan in the face of recent rate increases, make sure you take the time to check out Mozo’s refinancing home loans comparison table, to see if you can snag a better deal.