the adviser logo

Bank ‘forced’ to hike interest rates

by Reporter4 minute read
Arrow up, coins

A regional bank has said that it was forced to increase rates by up to 16 basis points this week in response to rising funding costs.

Effective immediately, ME has hiked interest rates on its owner-occupier and investor home loan products.

The non-major has lifted its standard variable rate on owner-occupier principal and interest mortgages with a loan-to-value ratio (LVR) of 80 per cent or less by 6 basis points, from 5.03 per cent to 5.09 per cent.

ME has also increased interest rates for basic owner-occupier interest-only loans by 16 basis points, from 4.84 per cent to 5.00 per cent.


Further, rates on basic investor principal and interest loans have risen by 11 basis points, from 4.69 per cent to 4.80 per cent.

Interest rates on basic investor interest-only loans have also been lifted, increasing by 16 basis points, from 5.09 per cent to 5.25 per cent.

ME CEO James McPhee claimed that the bank was “forced” to increase rates in response to rising funding and compliance costs.

“Funding costs have been steadily increasing over the last few months primarily due to rising US interest rates that have flowed through to higher short-term interest rates in Australia.

“In addition, ME continues to transition its funding mix to ensure the requirements of the Net Stable Funding Ratio will be met, and this is also increasing our funding costs.

“At the same time, industry reforms and increasing regulatory obligations are increasing our compliance costs.

“This was not an easy decision, but rising costs have forced us to reset prices to maintain a balance between borrowers, depositors and our industry super fund shareholders and their members, all while ensuring we continue to grow and provide a genuine long-term banking alternative.

“We will continue to assess market conditions and make changes to prices to maintain this balance if necessary.”

[Related: Lending slows by 18% at regional bank]

arrow up coins


You need to be a member to post comments. Register for free today


Stephen Hale ta

MFAA launches near-prime, specialist loan resource

Coined Finance for when your customer doesn’t fit the mould: A broker’s guide to near-prime and...

Daniel Newell Gedda

Specialist lender LoanU rebrands to Gedda

The personal and auto loan provider LoanU, which specialises in helping Australians with impaired credit histories...

tech tools

CBA introduces AI technology to combat scams

New figures released by the competition watchdog this week have revealed that Australians lost more than $2 billion...

Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more