Mortgage providers quietly raise interest rates in first days of 2017

By Roisin Kelly-Goldsmith · · 3 min read
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It was the interest rate outcome our experts here at Mozo had been forecasting for months, but one that homeowners and investors hoped wouldn’t play out.

Nine providers have raised interest rates on fixed and variable mortgages already this year, following the rate hike trend we saw before Christmas. This comes despite the RBA keeping the official cash rate steady at 1.50% since August.

One home loan lender announcing rate increases in the first days of 2017 was Suncorp, citing intensified competition and “the cost of meeting regulatory change” as the reasons behind the hike.

“While we have been absorbing these increasing costs, it’s evident that the trend is
not likely to change,” warned CEO David Carter on Wednesday.

“These factors are also impacting the broader industry, with many of our competitors implementing similar rate changes.”

Other lenders to have announced rate increases of up to 25 basis points include Bank Australia, Bendigo Bank and Credit Union SA.

"Before the holiday break we kept a close eye on what lenders were doing with rates and reported the increases as they were announced,” said Product Data Manager at Mozo, Peter Marshall.

“As expected the rate hikes have continued in 2017, as we've already seen a barrage of changes. Regardless of what the RBA does next I expect the upward rate pressure to continue," he added.

Standard variable rate increases

  • Bank Australia - Applied an 8bp increase to its standard variable rate, which now sits at 4.82%.
  • ME Bank - Bumped rates up by a slightly higher 10 basis points to 5.03%.
  • MyState - Rates offered by MyState climbed 12bp higher to 5.23%.
  • Suncorp - Announced it will hitch variable rates by 15 basis points to 5.55%, effective from January 23.
  • The Rock - A 12bp hike has been applied to The Rock’s SVR, bringing it to 5.73%.
  • Virgin Money - The standard variable rate offered by Virgin Money increased by 10 basis points to 4.64% today.

Fixed rate increases

  • act. - Increased fixed two and three year rates by 10 basis points, which now sit at 4.24% and 4.34% respectively for owner occupiers and investors.
  • Bank Australia - Hitched rates running for three years by 10bp and five years by a steeper 25bp. The three year rate for new customers is now 3.79%, while five year rates are at the 4.24% mark.
  • Bendigo Bank - Regional provider Bendigo Bank applied 10 basis point hikes to its two and three year rates, now offering borrowers a 4.09% and 4.19% rate. Investor rates were lifted by up to 15 basis points across various terms.
  • Credit Union SA - Rates for two and three years rose by 20bp to 4.09% and 4.19% respectively.

Best variable rates

Owner occupiers: 3.35%, Reduce Home Loans

Investors: 3.69%, BCU, FreedomLend and Police Credit Union

Best fixed rates

Owner occupiers:

  • 2 years - 3.64%, Homestar

Investors:

  • 2 years - 3.69%, CUA
  • 3 years - 3.69%, SCU and UBank

Ready to lock in a rate and shield your budget from potential rate rises in the New Year? Make the switch at our home loan comparison hub.

* 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 $150,000 over 25 years.

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