Monkey see, monkey do: 13 small banks follow big four in hiking home loan rates

Thursday 11 October 2018

Article by Monika Gudova

The start of spring is a time of new beginnings for Aussies. We pack away our winter doonas, give the house a good scrub down and start hitting the gym in time for summer. This year, it’s also the start of paying more for your home loan.

Monkey see, monkey do: 13 small banks follow big four in hiking home loan rates

Since August 29, when Westpac announced rate hikes across all its variable home loans, 13 second-tier lenders have upped their home loan rates, including the likes of St. George Bank, Suncorp and Bankwest.  

“Smaller lenders are subject to the same funding cost pressures the big four has attributed to their rate hikes,” said Mozo Data Manager, Peter Marshall.

“It’s for this reason many of them have lifted their home loan rates.”

Which small banks have hiked their home loan rates

Given that many Aussies are choosing second-tier lenders in search of a more competitive home loan rate, it comes as bad news that some smaller lenders are shadowing the big four in their mortgage rate changes.  

Here are the lenders who’ve have hiked their home loan rates since August 29:

LenderRate ChangeApplies to:
Northern Inland CU
Up 0.19%All variable loans except line of credit
Adelaide BankUp 0.12%All variable loans except line of credit
G&C MutualUp 0.12%

Up 0.18%
Owner Occuper (P&I & IO)

Investor loans (P&I & IO
Adelaide BankUp 0.12%All variable loans except line of credit
SuncorpUp 0.17%All variable loans except line of credit
St. George BankUp 0.14%All variable loans
Bank of MelbourneUp 0.14%All variable loans
RAMSUp 0.14%All variable loans
INGUp 0.15%Investor loans (P&I & IO)
Maitland MutualUp 0.15%All variable loans except line of credit
Aussie (Basic loans)Up 0.15%All variable loans except line of credit
BankwestUp 0.15%All variable loans except line of credit
IMB bankUp 0.15%All variable loans except line of credit
BIDeloanUp 0.15%All variable loans except line of credit

The good news is that despite the long list, Mozo’s Peter Marshall has noted that home loan rates are unlikely to go up again for the time being.

“After another month of the official cash rate remaining steady, and funding costs remaining relatively stable, I expect most lenders would not have any further plans to increase variable rates in the near future,” said Peter.

And there's still plenty of value to be found at the moment for savvy home buyers who shop around before taking out a mortgage.

"There are rates as low as 3.44% in our database, so if you do your homework, you can still get a really good deal."

How will home loan rate changes affect my monthly repayments?

Whether your lender has already raised its variable home loan rates or you’re worried that it will, we’ve used our home loan repayments calculator to give you an idea of the changes you might have to budget for.

For example, if you’re borrowing $300,000 over 30 years with the average home loan rate in Mozo’s database of 4.37%, your monthly repayments would have totalled to $1,497.

If this interest rate were to increase by 15 basis points to 4.52%, that would bump your repayments up to $1,524, which is an additional of $27 a month, or $324 a year.

“A 15 basis point price jump may not seem like much on paper, but could equate to thousands over the many years it takes to pay off a loan,” said Marshall.

“No benefit comes from paying more interest than you have to, and if you’re not on a low rate, you should be.”

Are your monthly home loan repayments getting higher than you’d like? Mozo’s home loan switch and save calculator can help you figure out just how much you could be pocketing by refinancing to a lender offering a more competitive rate.

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