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A challenger bank has announced a number of pricing and policy changes across its home lending portfolio in response to regulatory measures.
In a statement on Friday, ME said that it will increase by 40 basis points all interest-only variable and fixed home loan offers to new borrowers. This change took effect on Saturday, 1 July.
ME will also increase by 40 basis points its reference rates on all existing variable interest-only loans. This change will affect existing customers in August.
Meanwhile, from 1 July, the bank will decrease by 10 basis points its principal and interest variable home loan offer to new owner-occupier borrowers who are applying for a loan in a member package valued at $150,000 or more and with an LVR at 80 per cent or less.
ME said the changes were being made to manage regulatory requirements on interest-only lending.
“The changes are necessary to ensure the bank complies with macroprudential measures introduced by APRA, while encouraging existing interest-only home loan borrowers to switch to principal and interest,” ME CEO, Jamie McPhee, said.
“Owner-occupier principal and interest home loan rates are at record lows. Now is a great time to pay down the principal on your home loan,” he said.
“ME does not apply a fee for switching from interest only to principal and interest.”
[Related: Westpac hikes rates by 34 points]
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James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.