The non-major bank has said that it will change the way it calculates rates for interest-only loans and will increase investor IO interest rates starting 1 November.
Previously, Suncorp Bank had the same rates for both principal and interest (P&I) and interest-only (IO) loans. However, the rates will now change and will be based on the purpose of the loan (i.e., owner-occupier or investor) and will take into account the type of loan repayment.
Speaking of the change, Banking & Wealth CEO David Carter said: “Following recent changes in the market, we have made changes to our systems to differentiate between borrowers repaying interest-only and those repaying P&I.
“The change is important as it will ensure the bank can maintain its position relative to regulatory requirements.”
The bank becomes the latest lender to tighten up on IO loans, with some having repriced IO loans in recent weeks, and others temporarily opting out of the investor market altogether to stay within regulator speed limits.
Suncorp Bank has revealed that its variable interest rates on existing owner-occupier IO loans will increase by 0.10 per cent, while variable interest rates on all investor IO loans will increase by 38 basis points from 1 November.
The bank said that it will be telling customers of the changes this week, but added that the rates remain “highly competitive” despite the changes.
Interest rates on existing P&I loans will not change nor will IO rates on construction loans.
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