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

Kelly Emmerton

19 Apr 2018

Me hikes rates home loan content

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. Advertiser disclosure.

  • UBank

    1.95% p.a.
    fixed 3 years

    2.27% p.a.

    $1234

    Product details Close details
    UHomeLoan

    Owner Occupier, Principal & Interest

    1.95% p.a.
    fixed 3 years

    2.27% p.a.

    $0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

    UHomeLoan

    $0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

    • 1.95% p.a.
      fixed 3 years

    • 2.27% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free up to $20,000 during fixed rate term

    • no

    • no

    • $0

    • 80.00%

    • $100,000

    • $2,000,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • $395 Establishment fee waived for fixed rate loans that settle by 30 September 2021.

    Read our Mozo Review to learn more about the UHomeLoan

    Details Close

  • Macquarie

    2.09% p.a.
    fixed 3 years

    2.32% p.a.

    $1234

    Product details Close details
    Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    2.09% p.a.
    fixed 3 years

    2.32% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

    Basic Home Loan

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

    • 2.09% p.a.
      fixed 3 years

    • 2.32% p.a.

    • $0

    • $0.00

    • $400.00

    • yes - free

    • yes - free

    • no

    • $0

    • 70.00%

    • $150,000

    • $750,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Monthly

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

    Details Close

  • Newcastle Permanent

    1.89% p.a.
    fixed 2 years

    3.67% p.a.

    $1234

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

    Owner Occupier, Principal & Interest

    1.89% p.a.
    fixed 2 years

    3.67% p.a.

    Lock in a low fixed rate or choose to split your loan between fixed and variable. Insurance discounts and no fee credit card or zero fee personal loan available. $2,000 cashback offer for home loans over $250k with at least a 20% deposit when refinancing to Newcastle Permanent.

    Special Fixed Rate Home Loan Premium Plus Package

    Lock in a low fixed rate or choose to split your loan between fixed and variable. Insurance discounts and no fee credit card or zero fee personal loan available. $2,000 cashback offer for home loans over $250k with at least a 20% deposit when refinancing to Newcastle Permanent.

    • 1.89% p.a.
      fixed 2 years

    • 3.67% 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

    • $2,000 cashback when you refinance your home loan from another financial institution when you apply by 30 September 2021 and are funded by 30 November 2021, min $250k, LVR <80%

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

    Details Close

  • HSBC

    2.09% p.a.
    fixed 3 years

    2.86% p.a.

    $1234

    Product details Close details
    Fixed Rate Home Loan Home Loan Package

    Owner Occupier, Principal & Interest, LVR <80%

    2.09% p.a.
    fixed 3 years

    2.86% p.a.

    Ability to split your home loan between Fixed and Variable. Dedicated Relationship Manager. Min 20% deposit. Refinancers borrowing $250,000 or more could receive $3,288 cashback (T&Cs, eligibility and lending criteria apply).

    Fixed Rate Home Loan Home Loan Package

    Ability to split your home loan between Fixed and Variable. Dedicated Relationship Manager. Min 20% deposit. Refinancers borrowing $250,000 or more could receive $3,288 cashback (T&Cs, eligibility and lending criteria apply).

    • 2.09% p.a.
      fixed 3 years

    • 2.86% p.a.

    • $270

    • $390.00 yearly

    • $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

    • Receive $3,288 cashback when you refinance a minimum of $250k for applications until 31 August 2021.

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

    Details Close

  • Well Home Loans

    1.95% p.a.
    fixed 2 years

    2.02% p.a.

    $1234

    Product details Close details
    Well Balanced Fixed

    Owner Occupier, Principal & Interest, LVR <80%

    1.95% p.a.
    fixed 2 years

    2.02% p.a.

    Super low fixed rate and only 20% deposit required. Optional 100% offset account. Free extra repayments and redraw facility. Flexible repayment schedule.

    Well Balanced Fixed

    Super low fixed rate and only 20% deposit required. Optional 100% offset account. Free extra repayments and redraw facility. Flexible repayment schedule.

    • 1.95% p.a.
      fixed 2 years

    • 2.02% p.a.

    • $785

    • $0.00

    • $300.00

    • yes - free

    • yes - free

    • Optional - $10 per month

    • $785

    • 80.00%

    • $200,000

    • $2,000,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Well Balanced Fixed

    Details Close

^See information about the Mozo Experts Choice Home loans Awards