ING mortgages just got cheaper _and dearer

ING mortgages just got cheaper _and dearer

ING Australia has today made a series of changes to its home loan interest rates, with some falling by up to 17 basis points and others rising by up to 41 points.

In terms of interest rates, the winners are (see tables below):

  • Owner-occupiers with a variable Mortgage Simplifier mortgage
  • Investors with a variable Mortgage Simplifier mortgage
  • Investors with a variable Orange Advantage mortgage

And the interest rate losers are:

  • Investors with a fixed-rate mortgage

Mortgage Simplifier mortgages

Owner-occupiers with a variable mortgage paying principal and interest

Home loan Interest rate Comparison rate Change to interest rate
Aggregate borrowings $1m+ and LVR less than or equal to 80% 3.69% 3.72% -0.10%
Aggregate borrowings $500k+ to $1m and LVR less than or equal to 80% 3.73% 3.76% -0.10%

Aggregate borrowings $150k+ and LVR less than or equal to 80%

3.73% 3.76% -0.10%
Aggregate borrowings $150k+ and LVR greater than 80% and less than 90% 4.02% 4.04% -0.17%

Owner-occupiers with a variable mortgage paying interest-only

Home loan Interest rate Comparison rate Change to interest rate
Aggregate borrowings $1m+ and LVR less than or equal to 80% 4.09% 4.11% -0.10%
Aggregate borrowings $500k+ to $1m and LVR less than or equal to 80% 4.13% 4.15% -0.10%
Aggregate borrowings $150k+ and LVR less than or equal to 80% 4.13% 4.15% -0.10%

Investors with a variable mortgage paying principal and interest

Home loan Interest rate Comparison rate Change to interest rate
Aggregate borrowings $150k+ and LVR less than or equal to 80% 4.29% 4.31% -0.15%

Investors with a variable mortgage paying interest-only

Home loan Interest rate Comparison rate Change to interest rate
Aggregate borrowings $150k+ and LVR less than or equal to 80% 4.69% 4.71% -0.15%

Orange Advantage mortgages

Investors with a variable mortgage paying principal and interest

Home loan Interest rate Comparison rate Change to interest rate
Aggregate borrowings $150k+ and LVR less than or equal to 80% 4.24% 4.55% -0.05%

Investors with a variable mortgage paying interest-only

Home loan Interest rate Comparison rate Change to interest rate
Aggregate borrowings $150k+ and LVR less than or equal to 80% 4.64% 4.95% -0.05%

Fixed-rate mortgages

Investors paying either principal and interest or interest-only

Home loan Interest rate Comparison rate Change to interest rate
1-year fixed 4.32% 5.56% +0.08%
2-year fixed 4.37% 5.45% +0.03%
3-year fixed 4.55% 5.39% +0.16%
4-year fixed 4.69% 5.35% +0.10%
5-year fixed 4.90% 5.37% +0.41%

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Learn more about home loans

What happens to my home loan when interest rates rise?

If you are on a variable rate home loan, every so often your rate will be subject to increases and decreases. Rate changes are determined by your lender, not the Reserve Bank of Australia, however often when the RBA changes the cash rate, a number of banks will follow suit, at least to some extent. You can use RateCity cash rate to check how the latest interest rate change affected your mortgage interest rate.

When your rate rises, you will be required to pay your bank more each month in mortgage repayments. Similarly, if your interest rate is cut, then your monthly repayments will decrease. Your lender will notify you of what your new repayments will be, although you can do the calculations yourself, and compare other home loan rates using our mortgage calculator.

There is no way of conclusively predicting when interest rates will go up or down on home loans so if you prefer a more stable approach consider opting for a fixed rate loan.

What is a standard variable rate (SVR)?

The standard variable rate (SVR) is the interest rate a lender applies to their standard home loan. It is a variable interest rate which is normally used as a benchmark from which they price their other variable rate home loan products.

A standard variable rate home loan typically includes most, if not all the features the lender has on offer, such as an offset account, but it often comes with a higher interest rate attached than their most ‘basic’ product on offer (usually referred to as their basic variable rate mortgage).

What is the difference between fixed, variable and split rates?

Fixed rate

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.

Variable rate

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

Split rates home loans

A split loan lets you fix a portion of your loan, and leave the remainder on a variable rate so you get a bet each way on fixed and variable rates. A split loan is a good option for someone who wants the peace of mind that regular repayments can provide but still wants to retain some of the additional features variable loans typically provide such as an offset account. Of course, with most things in life, split loans are still a trade-off. If the variable rate goes down, for example, the lower interest rates will only apply to the section that you didn’t fix.

What is the best interest rate for a mortgage?

The fastest way to find out what the lowest interest rates on the market are is to use a comparison website.

While a low interest rate is highly preferable, it is not the only factor that will determine whether a particular loan is right for you.

Loans with low interest rates can often include hidden catches, such as high fees or a period of low rates which jumps up after the introductory period has ended.

To work out the best value for money, have a look at a loan’s comparison rate and read the fine print to get across all the fees and charges that you could be theoretically charged over the life of the loan.

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

What is a comparison rate?

The comparison rate is a more inclusive way of comparing home loans that factors in not only on the interest rate but also the majority of upfront and ongoing charges that add to the total cost of a home loan.

The rate is calculated using an industry-wide formula based on a $150,000 loan over a 25-year period and includes things like revert rates after an introductory or fixed rate period, application fees and monthly account keeping fees.

In Australia, all lenders are required by law to publish the comparison rate alongside their advertised rate so people can compare products easily.

What is a variable home loan?

A variable rate home loan is one where the interest rate can and will change over the course of your loan. The rate is determined by your lender, not the Reserve Bank of Australia, so while the cash rate might go down, your bank may decide not to follow suit, although they do broadly follow market conditions. One of the upsides of variable rates is that they are typically more flexible than their fixed rate counterparts which means that a lot of these products will let you make extra repayments and offer features such as offset accounts.

How can I calculate interest on my home loan?

You can calculate the total interest you will pay over the life of your loan by using a mortgage calculator. The calculator will estimate your repayments based on the amount you want to borrow, the interest rate, the length of your loan, whether you are an owner-occupier or an investor and whether you plan to pay ‘principal and interest’ or ‘interest-only’.

If you are buying a new home, the calculator will also help you work out how much you’ll need to pay in stamp duty and other related costs.

What is 'principal and interest'?

‘Principal and interest’ loans are the most common type of home loans on the market. The principal part of the loan is the initial sum lent to the customer and the interest is the money paid on top of this, at the agreed interest rate, until the end of the loan.

By reducing the principal amount, the total of interest charged will also become smaller until eventually the debt is paid off in full.

What is a honeymoon rate and honeymoon period?

Also known as the ‘introductory rate’ or ‘bait rate’, a honeymoon rate is a special low interest rate applied to loans for an initial period to attract more borrowers. The honeymoon period when this lower rate applies usually varies from six months to one year. The rate can be fixed, capped or variable for the first 12 months of the loan. At the end of the term, the loan reverts to the standard variable rate.

What is a fixed home loan?

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.

Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

Can I get a home loan if I am on an employment contract?

Some lenders will allow you to apply for a mortgage if you are a contractor or freelancer. However, many lenders prefer you to be in a permanent, ongoing role, because a more stable income means you’re more likely to keep up with your repayments.

If you’re a contractor, freelancer, or are otherwise self-employed, it may still be possible to apply for a low-doc home loan, as these mortgages require less specific proof of income.