Bank of Queensland to acquire ME Bank, pushes to compete with big four

Bank of Queensland to acquire ME Bank, pushes to compete with big four

Bank of Queensland has revealed a $1.325 billion deal to purchase ME Bank, in a statement to the Australian Stock Exchange today. 

Bank of Queensland (BOQ) confirmed the plans to acquire industry fund-owned ME Bank in an effort to compete with the big four banks and “balance out” its presence on the east coast.

BOQ Chairman, Patrick Allaway, stated: “Today’s announcement is another major step in our strategy to be the leading customer-centric alternative to the big banks.” 

“With the addition of the ME Bank business, BOQ now has material scale and a compelling growth platform to support this ambition. 

“The combination of our highly complementary businesses brings together two organisations with a shared purpose and values generating greater value for customers, employees and shareholders,” said Mr Allaway.  

Pending regulatory approval, ME Bank will join the previously acquired Virgin Money Australia in 2013. 

For BOQ, the move will double the size of its retail banks, increase the value of mortgages to $75 million and grow its customer base to 1.5 million, revealed Managing Director and CEO, George Frazis. 

“The acquisition of ME Bank will create a compelling alternative to the big four banks,” said Mr Frazis.

The move has been endorsed by ME Bank’s shareholders, represented by 26 industry super funds. 

ME Bank Chairman, James Evans, said: “This agreement brings together two culturally aligned organisations to form what will be an enhanced and influential banking alternative for customers.”

Home loan customers to get best of both worlds

Currently, 75 per cent of ME Bank customers are funnelled through third-party brokers. Mortgages are its largest source of revenue.

The acquisition will see BOQ able to provide a greater choice to different customer segments looking for a home loan.

“What’s really important for us is to help more Australians into homes. Different segments have different needs,” said Mr Frazis.  

“Bank of Queensland [customers] require a more personal touch, which is why branch managers are important. Virgin Money is all broker and ME Bank is primarily broker.”

Those that enjoy face-to-face customer service will still be able to be serviced by BOQ branch managers. Younger Australians who prefer to do their banking on their phones or laptops can seek comfort with Virgin Money and ME Bank online platforms.  

Mr Frazis also touched on the launch of its “state-of-the-art” cloud-based banking system to be launched next month. This new system should allow BOQ, Virgin Money and ME Bank to seamlessly let brokers track home loan applications and let customers make changes with a shorter turn-around.

What does this mean for ME Bank customers?

Put simply, it will be business as usual for ME Bank customers, as confirmed by the banks’ Chairman, James Evans.

“ME customers will be able to enjoy the same simple and straightforward products and services we know they expect from ME Bank, along with the additional benefits of being part of a bigger bank,” said Mr Evans. 

But it’s worth keeping in mind that customers may have more options when it comes to refinancing mortgages or even opening a new bank or savings account.

Customers will still need to meet any eligibility criteria, but thanks to the implementation of its cloud-based banking system next month, an ME Bank customer may find opening a BOQ savings account, for example, a much easier and potentially streamlined process.

For example, Bank of Queensland currently offers one of the most competitive savings account rates on the market for younger Australians. Those aged 14-24 can apply for the Fast Track Starter Account with a whopping 3 per cent bonus interest rate.

Home loan customers may be interested to know how BOQ and ME Bank’s interest rates stack up against each other too, while the news of just how much of ME Bank’s home loans are funnelled through brokers may mean that those applying for a home loan through ME Bank may be well advised to consider their own broker, or just simply shop around for their best rate all the same.

Lowest owner-occupier principal & interest home loans:

Lowest rate Variable 1 year fixed 2 year fixed 3 year fixed 4 year fixed 5 year fixed
BOQ 2.59% 2.19% 2.09% 2.09% 1.99% 2.09%
ME Bank 2.49% 2.19% 1.99% 2.09% 2.69% 2.69%

Source: RateCity.com.au. Data accurate as of 22.02.2021.

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Learn more about home loans

Cash or mortgage – which is more suitable to buy an investment property?

Deciding whether to buy an investment property with cash or a mortgage is a matter or personal choice and will often depend on your financial situation. Using cash may seem logical if you have the money in reserve and it can allow you to later use the equity in your home. However, there may be other factors to think about, such as whether there are other debts to pay down and whether it will tie up all of your spare cash. Again, it’s a personal choice and may be worth seeking personal advice.

A mortgage is a popular option for people who don’t have enough cash in the bank to pay for an investment property. Sometimes when you take out a mortgage you can offset your loan interest against the rental income you may earn. The rental income can also help to pay down the loan.

Why does Westpac charge an early termination fee for home loans?

The Westpac home loan early termination fee or break cost is applicable if you have a fixed rate home loan and repay part of or the whole outstanding amount before the fixed period ends. If you’re switching between products before the fixed period ends, you’ll pay a switching break cost and an administrative fee. 

The Westpac home loan early termination fee may not apply if you repay an amount below the prepayment threshold. The prepayment threshold is the amount Westpac allows you to repay during the fixed period outside your regular repayments.

Westpac charges this fee because when you take out a home loan, the bank borrows the funds with wholesale rates available to banks and lenders. Westpac will then work out your interest rate based on you making regular repayments for a fixed period. If you repay before this period ends, the lender may incur a loss if there is any change in the wholesale rate of interest.

What do people do with a Macquarie Bank reverse?

There are a number of ways people use a Macquarie Bank reverse mortgage. Below are some reasons borrowers tend to release their home’s equity via a reverse mortgage:

  • To top up superannuation or pension income to pay for monthly bills;
  • To consolidate and repay high-interest debt like credit cards or personal loans;
  • To fund renovations, repairs or upgrades to their home
  • To help your children or grandkids through financial difficulties. 

While there are no limitations on how you can use a Macquarie reverse mortgage loan, a reverse mortgage is not right for all borrowers. Reverse mortgages compound the interest, which means you end up paying interest on your interest. They can also affect your entitlement to things like the pension It’s important to think carefully, read up and speak with your family before you apply for a reverse mortgage.

What are the features of home loans for expats from Westpac?

If you’re an Australian citizen living and working abroad, you can borrow to buy a property in Australia. With a Westpac non-resident home loan, you can borrow up to 80 per cent of the property value to purchase a property whilst living overseas. The minimum loan amount for these loans is $25,000, with a maximum loan term of 30 years.

The interest rates and other fees for Westpac non-resident home loans are the same as regular home loans offered to borrowers living in Australia. You’ll have to submit proof of income, six-month bank statements, an employment letter, and your last two payslips. You may also be required to submit a copy of your passport and visa that shows you’re allowed to live and work abroad.

How do I find out my current interest rate and how much is owing on my loan?

Your bank statements and/or your internet banking should show these details. If you are not sure, call your bank or estimate.

How do I apply for a home loan pre-approval from Commonwealth Bank?

To apply for a Commbank home loan pre-approval, you can either call the bank at 13 2224 or meet one of the bank’s lending specialists. You can set up a meeting online if you wish. You’ll need to do some homework before contacting the bank, such as gathering information on the kind of properties you’d like to buy and their prices.

Preparing a financial summary, which lists all your income sources as well as significant expenses, can also help determine how much you can afford to borrow. You may also want to check your credit score before applying for pre-approval.

It’s worth remembering that a CBA home loan pre-approval doesn’t guarantee that you’ll get the loan. Once you get the pre-approval, you’ll have about three to six months to decide on a property and apply for the home loan. The bank will then confirm that the property is suitable for the loan before fully approving it.

How is interest charged on a reverse mortgage from IMB Bank?

An IMB Bank reverse mortgage allows you to borrow against your home equity. You can draw down the loan amount as a lump sum, regular income stream, line of credit or a combination. The interest can either be fixed or variable. To understand the current rates, you can check the lender’s website.

No repayments are required as long as you live in the home. If you sell it or move to a senior living facility, the loan must be repaid in full. In some cases, this can also happen after you have died. Generally, the interest rates for reverse mortgages are higher than regular mortgage loans.

The interest is added to the loan amount and it is compounded. It means you’ll pay interest on the interest you accrue. Therefore, the longer you have the loan, the higher is the interest and the amount you’ll have to repay.

How to apply for a pre-approval home loan from Bendigo Bank?

Applying for pre-approval on your home loan gives you confidence in your ability to secure finance while looking at potential new homes. You can get a free and personalised pre-approval home loan from Bendigo Bank in just a few minutes, without any credit checks or paperwork. 

Bendigo Bank offers pre-approval for home loans that allow you to understand the home loan size you may be able to get before looking for a new home. 

With the pre-approval, Bendigo Bank provides an estimate of your borrowing power. This figure incorporates stamp duty, lenders mortgage insurance (LMI) and any first home buyer incentives you may be eligible for. You may also qualify for the First Home Loan Deposit Scheme initiative, depending on your circumstances. 

To apply for a pre-approval on your home loan from Bendigo Bank, all you need to do is fill in a smart form. You could also contact the bank directly on 1300 236 344.

When does Commonwealth Bank charge an early exit fee?

When you take out a fixed interest home loan with the Commonwealth Bank, you’re able to lock the interest for a particular period. If the rates change during this period, your repayments remain unchanged. If you break the loan during the fixed interest period, you’ll have to pay the Commonwealth Bank home loan early exit fee and an administrative fee.

The Early Repayment Adjustment (ERA) and Administrative fees are applicable in the following instances:

  • If you switch your loan from fixed interest to variable rate
  • When you apply for a top-up home loan
  • If you repay over and above the annual threshold limit, which is $10,000 per year during the fixed interest period
  • When you prepay the entire outstanding loan balance before the end of the fixed interest duration.

The fee calculation depends on the interest rates, the amount you’ve repaid and the loan size. You can contact the lender to understand more about what you may have to pay. 

How to use the ME Bank reverse mortgage calculator?

You can access the equity in your home to help you fund your needs during your senior years. A ME Bank reverse mortgage allows you to tap into the equity you’ve built up in your home while you continue living in your house. You can also use the funds to pay for your move to a retirement home and repay the loan when you sell the property.

Generally, if you’re 60 years old, you can borrow up to 15 per cent of the property value. If you are older than 75 years, the amount you can access increases to up to 30 per cent. You can use a reverse mortgage calculator to know how much you can borrow.

To take out a ME Bank reverse mortgage, you’ll need to provide information like your age, type of property – house or an apartment, postcode, and the estimated market value of the property. The loan to value ratio (LVR) is calculated based on your age and the property’s value.

When do mortgage payments start after settlement?

Generally speaking, your first mortgage payment falls due one month after the settlement date. However, this may vary based on your mortgage terms. You can check the exact date by contacting your lender.

Usually your settlement agent will meet the seller’s representatives to exchange documents at an agreed place and time. The balance purchase price is paid to the seller. The lender will register a mortgage against your title and give you the funds to purchase the new home.

Once the settlement process is complete, the lender allows you to draw down the loan. The loan amount is debited from your loan account. As soon as the settlement paperwork is sorted, you can collect the keys to your new home and work your way through the moving-in checklist.

Am I guaranteed to be approved for all the loans I’m shown?

No. While we will do our best to show a list of loans that may suit your needs, if you choose to apply to refinance, it is up to the lender to approve or disapprove your loan based on your individual circumstances, after you have submitted all your paperwork.

This can sometimes take up to 30 days, so it is important to find out exactly what the criteria is for the loan, and what you need in terms of paperwork. RateCity does not make any suggestions taking into account your personal and individual needs.

How do you calculate how much you could save with a lower rate?

To work out how much you could save, we run the home loan details you’ve provided through our database, and search for similar home loan options that we think would be suitable for you.

We then calculate the costs of these loan options over 15 years (to keep our calculations consistent) and compare them to the cost calculations for your current home loan.

What happens if I don’t know my monthly repayments?

Your repayments should appear on your bank statements or your internet banking. If you make weekly or fortnightly repayments, make sure you convert them to monthly calculations.