ME hikes home loan interest rates: does this mark the end of super low rates?

Kelly Emmerton

19 Apr 2018

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Online lender ME has announced it is increasing home loan interest rates across its variable mortgage range effective today, citing increased funding costs as the reason - and it’s not the first to do so.

ME hiked its standard variable rate for existing owner-occupier principal-and-interest borrowers with an 80% LVR by 6 basis points, bringing it to 5.09% p.a. (5.11% comparison rate).

Existing investor principal-and-interest borrowers were hit with a bigger increase of 11 basis points, while interest-only borrowers saw the biggest increase of 16 basis points.

ME home loan rate changes - April 2018

                            

ME CEO Jamie McPhee said higher funding costs and an increase in regulatory requirements were the main reasons for the rate changes.

“Funding costs have been steadily increasing over the last few months primarily due to rising US interest rates that have flowed through to higher short-term interest rates in Australia,” he said.

“At the same time, industry reforms and increasing regulatory obligations are increasing our compliance costs.”

The move from ME follows a similar change from Suncorp in March, when it raised home loan rates by as much as 12 basis points, also citing funding pressure as the main reason.

“Funding costs have been steadily rising since the end of October. This has been driven by the outlook for US interest rates, as well as domestic factors,” said Suncorp Banking & Wealth CEO David Carter.

Mozo Data Manager Peter Marshall has been expecting funding pressures to result in more rate rises for a while now, and said borrowers can expect even more rate hikes to come.

“With the cost of finding overseas funding on the rise, I think a number of banks are going to start nudging their home loan rates up over the coming months,” he said.

“We’ve been in an incredibly low rate environment for a long time now - there hasn’t been an RBA rate rise since November 2010. But the RBA has flagged its intentions to start raising the cash rate, and the US Fed have already started raising rates, so Australia’s rock bottom borrowing rates can’t last forever.”

So if you’re borrowing or refinancing your existing mortgage, now’s the time to look around for a low rate option and maybe even to lock in a fixed rate. To get you started, check out some hot fixed rate home loan options below.

Hot fixed rate home loans 2018 - rates updated daily

  • Promoted

    Suncorp

    2.29% p.a.
    fixed 2 years

    3.32% p.a.

    $1234

    Product details Close details
    Fixed Home Loan Special Offer Home Package Plus

    No monthly account keeping fees & No loan establishment fee. Get a $2,000 cash bonus when you refinance with an eligible Suncorp Bank Home Loan of $250k+. T&Cs & eligibility criteria apply.

    • 2.29% p.a.
      fixed 2 years

    • 3.32% p.a.

    • $0

    • $375.00 yearly

    • $350.00

    • yes - free up to $500 per month

    • no

    • no

    • $0

    • 90.00%

    • $150,000

    • -

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • Refinance from another lender to receive a $2,000 cash bonus for loans of at least $250,000 or $3,000 bonus for loans over $750,000. Available for loans with an LVR <90% and applications made by 10 July 2020 and settled by 10 November 2020.

    Read our Mozo Review to learn more about the Fixed Home Loan Special Offer

  • Promoted

    HSBC

    2.09% p.a.
    fixed 2 years

    2.98% p.a.

    $1234

    Product details Close details
    Fixed Rate Home Loan

    Have the security of a fixed rate for 2 years with the option to split with one of the HSBC variable Home Loans. No ongoing monthly service fees or annual fees. Mozo Experts Choice Fixed Home Loan 2020^

    • 2.09% p.a.
      fixed 2 years

    • 2.98% p.a.

    • $0

    • $0.00

    • $300.00

    • yes - free up to $10,000 p.a.

    • no

    • no

    • $0

    • 80.00%

    • $50,000

    • $7,500,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Fixed Rate Home Loan

  • Promoted

    Mozo

    2.29% p.a.
    fixed 3 years

    3.89% p.a.

    $1234

    Product details Close details
    Mystery Bank Deal

    Mozo online exclusive mystery big four bank: Available for loans up to $2,000,000 with a 20% deposit.

    • 2.29% p.a.
      fixed 3 years

    • 3.89% p.a.

    • $0

    • $395.00 yearly

    • $450.00

    • yes - free up to annual limit

    • no

    • no

    • $0

    • 90.00%

    • $150,000

    • -

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

  • Promoted

    Homestar

    2.06% p.a.
    fixed 2 years

    2.38% p.a.

    $1234

    Product details Close details
    Star Essentials Fixed Home Loan

    Super low rate fixed home loan. Make weekly, fortnightly or monthly repayments. Up to 80% LVR & Owner Occupier Loans only. Special annual fee offer for applications submitted by 30 September 2020 and settled by 31 December 2020

    • 2.06% p.a.
      fixed 2 years

    • 2.38% p.a.

    • $0

    • $395.00 yearly

    • $535.00

    • yes - free up to $20,000 p.a.

    • no

    • no

    • $0

    • 80.00%

    • $150,000

    • $850,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Star Essentials Fixed Home Loan

  • Promoted

    Newcastle Permanent

    2.18% p.a.
    fixed 2 years

    3.72% p.a.

    $1234

    Product details Close details
    Special Fixed Rate Home Loan Premium Plus Package

    Enjoy a great low rate with no ongoing fees. Ability to split your loan between fixed and variable. 100% offset account. Extra repayments and redraw facility.

    • 2.18% p.a.
      fixed 2 years

    • 3.72% p.a.

    • $0

    • $395.00 yearly

    • $0.00

    • yes - free up to $25,000 p.a.

    • yes - free

    • no

    • $0

    • 80.00%

    • $5,000

    • -

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Special Fixed Rate Home Loan

*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for the amount and term you entered.

**Initial monthly repayment figures are estimates only, based on the advertised rate, and a loan of $500,000 repaid over 25 years. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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