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TMB raises fixed rates amid ‘market pressures’

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Reporter 6 minute read

Teachers Mutual Bank has announced rate changes to selected fixed rate home loan products across all of its brands, as “increased market pressures” continue to bite the non-majors.

Starting this week (16 July), Teachers Mutual Bank, UniBank and Firefighters Mutual Bank will all increase interest rates on some new owner-occupier (OO), principal and interest (P&I) fixed rate home loans. 

The changes will see new one-year fixed rate OO P&I loans rise by 8 basis points — meaning rates will now start from 3.87 per cent (5.27 per cent comparison). 

Both two-year and three-year fixed rate OO P&I loans (new business) will rise by 9 basis points, bringing the starting interest rates to 3.78 per cent (5.12 per cent comparison) and 3.88 per cent (5.01 per cent comparison), respectively. 


All other home loan interest rates remain unchanged.

Teachers Mutual Bank Limited’s chief executive officer, Steve James, commented: “These rate changes are the first increase in 12 months for fixed rates, and follow a decrease to our fixed rates last November.

“Any new members who join after these rate changes will still have access to a competitive market rate and great products, such as our 100 per cent mortgage offset facility.”

In a note to brokers, the mutual banking group said that the rate changes are “due to increased market pressures”.

Indeed, it is the latest non-major bank to increase rates in the past few days, following a flurry of activity from the lenders.


From next week, Bendigo Bank will increase its variable interest rates on mortgages; AMP Bank has increased its variable lending rates for all owner-occupiers and investors for both new and existing business, while Macquarie Bank and ING have also recently changed their interest rates.

In a recent housing market update for NAB, CoreLogic research director Tim Lawless commented that although the market expects official interest rates will remain on hold until 2020, “there is growing pressure on lenders to lift mortgage rates due to higher funding costs being experienced overseas”.

Mr Lawless said: “Smaller banks and non-banks have more exposure to international funding markets, which has seen some of these lenders start to adjust their mortgage rates higher.”

Earlier this year, the chief financial officer (CFO) of Auswide Bank, Bill Schafer, attributed the hiking of its rates to a sharp rise in the bank bill swap rate (BBSW).

“Our funding costs have risen significantly in the last four months,” Mr Schafer told The Adviser sister title Mortgage Business.

“The BBSW — the 30-day rate and the 90-day rate — has had a large effect on our wholesale funding lines, and they’ve increased by between 30 and 35 points since the beginning of March, so that’s had a substantial effect on our net interest margin.

“We’ve been trying to absorb that across that period of time, with the hope that those costs would be relieved and the BBSW rates would decline, but now we’re nearing the end of the fourth month, we’ve taken the decision that the impact on our net interest margin is too severe, and unfortunately we needed to do an out-of-cycle rate increase.”

Further, the recent Deloitte Australian Mortgage Report 2018 found that the biggest challenge for non-majors is access to funding relative to the big four.

“We have seen that in the most recent fortnight, some of the non-majors have had to move their standard variable rate in response to movements in the underlying BBSW spread over cash,” Deloitte financial services partner James Hickey said.

“The majors have so far been able to absorb that and not pass on that movement. They may well move on it soon, but it just goes to show the heightened level of sensitivity the regional lenders have to wholesale funding markets.”

What do you think of the non-major banks?

The Adviser’s annual Third-Party Lending Report – Non-Major Banks survey 2018 has now opened, looking specifically at product offering, technology, broker support and commission.

This is your chance to tell us what the non-major banks are doing well and where they should improve their broker proposition, if they are to win more of your business.

The survey will only take around 10–15 minutes to complete.

Have your say now by completing the Third-Party Lending Report – Non-Major Banks survey online.

[Related: Bendigo Bank becomes latest lender to hike rates]

TMB raises fixed rates amid ‘market pressures’
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