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

Kelly Emmerton

19 Apr 2018

redactor/hero-images/328/me-hikes-rates-home-loan_content.jpg

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

    ING

    2.09% p.a.
    fixed 2 years

    3.77% p.a.

    $1234

    Product details Close details
    Fixed Rate Loan Orange Advantage

    Know exactly what your repayments will be, and you can fix your rate for up to 5 years. No monthly, annual or transaction fees and it's free to make extra repayments.

    • 2.09% p.a.
      fixed 2 years

    • 3.77% p.a.

    • $299

    • $0.00

    • $250.00

    • yes - free up to $10,000 pa

    • no

    • no

    • $299

    • 95.00%

    • $50,000

    • $2,000,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Fortnightly, Monthly

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

  • Promoted

    UBank

    2.69% p.a.
    fixed 3 years

    3.00% p.a.

    $1234

    Product details Close details
    UHomeLoan

    $0 fees and easy application with the Mozo Experts Choice Home Lender Bank of the Year.^ Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

    • 2.69% p.a.
      fixed 3 years

    • 3.00% p.a.

    • $395

    • $0.00

    • $0.00

    • yes - free up to $20,000 p.a.

    • no

    • no

    • $395

    • 80.00%

    • $100,000

    • $2,000,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the UHomeLoan

  • Promoted

    IMB Bank

    2.29% p.a.
    fixed 2 years

    3.12% p.a.

    $1234

    Product details Close details
    Fixed Home Loan

    The IMB Fixed Rate Home Loan gives you peace of mind with the security of fixed loan repayments. You can also pay up to 12 months repayments in advance without penalty

    • 2.29% p.a.
      fixed 2 years

    • 3.12% p.a.

    • $799

    • $6.00 monthly

    • $350.00

    • yes - free up to 1 year in advance

    • yes - free

    • no

    • $799

    • 95.00%

    • $10,000

    • $5,000,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

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

  • Promoted

    HSBC

    2.25% p.a.
    fixed 3 years

    3.12% p.a.

    $1234

    Product details Close details
    Fixed Rate Home Loan Premier

    Ability to split your home loan between Fixed and Variable. Dedicated Relationship Manager. Includes an HSBC Premier Master Card with HSBC rewards and no annual credit card fee allowing you to earn points. Mozo Experts Choice Fixed Home Loan 2020^

    • 2.25% p.a.
      fixed 3 years

    • 3.12% p.a.

    • $270

    • $35.00 monthly

    • $300.00

    • yes - free up to $10,000 p.a.

    • no

    • no

    • $270

    • 80.00%

    • $500,000

    • $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

    UBank

    2.84% p.a.
    fixed 3 years

    3.40% p.a.

    $1234

    Product details Close details
    Fixed UHomeLoan

    Fast, easy to apply and no monthly account fees.

    • 2.84% p.a.
      fixed 3 years

    • 3.40% p.a.

    • $395

    • $0.00

    • $0.00

    • yes - free up to $20,000 p.a.

    • no

    • no

    • $395

    • 80.00%

    • $100,000

    • $2,000,000

    • Fixed

    • Principal & Interest

    • Investor

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Fixed UHomeLoan

*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.

Mozo may receive advertising fees from the financial institutions, issuers of financial or credit products and third party advice providers that are shown on this page. These fees are based on a cost per click, cost per acquisition, or a fixed fee.