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Bank hits existing customers with 40-point rate hike

by Staff reporter4 minute read
ME Bank, home loans, financial, interest, borrowers

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. 

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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.

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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]

Bank hits existing customers with 40-point rate hike
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James Mitchell

James Mitchell

AUTHOR

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

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