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

    UBank

    2.69% p.a.
    fixed 3 years

    3.19% p.a.

    $1234

    Product details Close details
    UHomeLoan

    Fast, easy apply and no ongoing fees. Choose between weekly, fortnightly or monthly repayments. 1 year fixed rates are for new Owner Occupier Principal & Interest loans. Winner of a Mozo Experts Choice Award 2019 in the Fixed Rate Home Loan category.^

    • 2.69% p.a.
      fixed 3 years

    • 3.19% p.a.

    • $395

    • $0.00

    • $0.00

    • yes - free up to $20,000 p.a.

    • no

    • no

    • 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

    loans.com.au

    2.99% p.a.
    fixed 3 years

    3.27% p.a.

    $1234

    Product details Close details
    Fixed Rate Special Offer

    This 3 Year Fixed Rate Special Offer for purchase or refinance. Rate lock option available. No monthly or ongoing fees.

    • 2.99% p.a.
      fixed 3 years

    • 3.27% p.a.

    • $520

    • $0.00

    • $0.00

    • yes - free up to $10,000 p.a.

    • no

    • no

    • 80.00%

    • $50,000

    • $1,000,000

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

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

  • Promoted

    Suncorp

    2.89% p.a.
    fixed 3 years

    3.70% p.a.

    $1234

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

    Receive a $2,000 cash bonus when you take out a Home Package Plus home loan of $250,000 or more (T&Cs apply). No monthly account keeping fee & No loan establishment fee.

    • 2.89% p.a.
      fixed 3 years

    • 3.70% p.a.

    • $0

    • $375.00 yearly

    • $350.00

    • yes - free up to $500 per month

    • no

    • no

    • 90.00%

    • $150,000

    • -

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • Receive $2,000 when you refinance an existing loan of $250,000 or more with an LVR of <90%. Apply by 13 December 2019 and settle by 5 March 2020.

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

  • Promoted

    ANZ

    2.98% p.a.
    fixed 2 years

    4.45% p.a.

    $1234

    Product details Close details
    Fixed Rate Breakfree Package

    2yr fixed rate. Owner Occupier home loan with 0.15% discount on ANZ Breakfree Package, annual fee $395. Apply by 31/01/20, settle by 30/04/20 for $2,500 cashback on eligible refinanced loans of $250K+ (incl. any new lending). Offer terms, fees, charges and elig. criteria apply.

    • 2.98% p.a.
      fixed 2 years

    • 4.45% p.a.

    • $0

    • $395.00 yearly

    • $160.00

    • yes - free up to annual limit

    • no

    • yes - 1 year fixed term only

    • 80.00%

    • $500,000

    • -

    • Fixed

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • Refinance by 31 January 2020 to receive up to $3,500 cash back depending on the loan amount with an ANZ linked transaction account.

    Read our Mozo Review to learn more about the Fixed Rate

  • Promoted

    Queensland Country Credit Union

    3.49% p.a.
    fixed 3 years

    3.90% p.a.

    $1234

    Product details Close details
    RateSaver

    No Annual or Monthly Loan Maintenance Fees. Pay up to $10,000 in additional repayments each year. Borrow up to 90% LVR.

    • 3.49% p.a.
      fixed 3 years

    • 3.90% p.a.

    • $500

    • $0.00

    • $0.00

    • yes - up to $10,000 per year

    • no

    • no

    • 90.00%

    • $100,000

    • $5,000,000

    • Fixed

    • Interest Only

    • Investor

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the RateSaver

*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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