The hike effects all existing variable rate home loan customers, while only a select number of new customer rates are rising by 0.05 per cent and 0.20 per cent.
Virgin Money’s decision to hike rates today follows Bank of Queensland decision to lift its variable home loan rates by up to 0.18 per cent on Wednesday.
According to a statement from Virgin Money, the high cost of wholesale funding is the reason they have decided to hike rates.
RateCity.com.au research director Sally Tindall said Virgin Money’s decision to pass these costs onto customers was becoming a trend.
“This is purely a business decision for Virgin Money. They’ve decided to ask their existing customers to pay more on their home loan to cover a shortfall they’ve been absorbing over the last 12 months.
“Virgin was a notable exception in the out-of-cycle rate hikes that happened mid last year.
“As the cost of funding continues to plague Australian lenders, today’s move is likely to be the next step towards a landslide of rate hikes.
“Virgin has still managed to keep their foot in the low rate market by only hiking their lowest rate product by 0.05 per cent for new customers.
“That way they can still offer a rate 3.69 per cent for people looking to bring new business in the door,” she said.
“With lenders hiking for existing customers but remaining low for new ones, now is an ideal time to switch, provided you’ve got some equity up your sleeve,” she said.
Estimated impact of Virgin rate hike
Based on a 30 year loan, owner occupier, paying principal and interest.