ME Bank hikes variable home loan interest rates

ME Bank hikes variable home loan interest rates

ME Bank has today announced it will increase its variable home loan interest rates for both new and existing customers.

Bearing the brunt of the rate hike is ME Bank’s existing variable customers, they’re being slugged with an 18 basis point increase, which will kick in next Friday.

The variable interest rate for new customers joining ME Bank will also go up, but by 8 basis points.

ME Bank hiked rates for their existing customers in April 2018, raising the variable rate by 6 basis points for owner occupiers paying principal and interest and 16 basis points for all other home loan customers.

RateCity.com.au research director Sally Tindall said it’s disheartening to see ME Bank decide to charge its loyal customers more than its new ones.

“ME Bank is clearly under funding pressures, like the other banks, however, they’ve still got one eye focused on getting new customers in the door.

“This is a reminder for all home loan customers to always be looking around for a better deal, don’t just accept a rate rise by your lender.

Impact of rate hike on existing customers

Loan Amount

Old Rate

New Rate

Monthly Difference

Annual Difference

$350,000

3.84%

4.02%

$36

 $434

 $500,000

3.79%

3.97%

$51

 $618

 $1,000,000

3.79%

3.97%

$103

 $1,236

ME Bank Flexible Home Loan Member Package, Principal and Interest LVR 80% or less over 30 years

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A fixed rate home loan is a loan where the interest rate is set for a certain amount of time, usually between one and 15 years. The advantage of a fixed rate is that you know exactly how much your repayments will be for the duration of the fixed term. There are some disadvantages to fixing that you need to be aware of. Some products won’t let you make extra repayments, or offer tools such as an offset account to help you reduce your interest, while others will charge a significant break fee if you decide to terminate the loan before the fixed period finishes.

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Popularly known as the loan term, the amortisation period is the time over which the borrower must pay back both the loan’s principal and interest. It is usually determined during the application approval process.

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Today’s home loans often try to lure borrowers with a range of flexible features, including offset accounts, redraw facilities, repayment frequency options, repayment holidays, split loan options and portability. Real Time Ratings™ weights each of these features based on popularity and gives loans a ‘flexibility score’ based on how much they cater to borrowers’ needs over time. The aim is to give a higher score to loans which give borrowers more features and options.

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