Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter

Non-majors reduce variable rates

Two non-major lenders have today announced that they will cut their variable home loan rates in light of the Reserve’s Bank’s 25 basis point cut on Tuesday.

Virgin Money announced today that it will pass on the full RBA rate cut to owner-occupiers, while investors will receive a 20 basis point reduction.

In a statement this afternoon, Virgin Money said its variable rate for owner-occupiers will fall to 3.69 per cent, while its variable rate for investors will drop to 3.99 per cent.

Advertisement
Advertisement

Meanwhile, ME Bank today announced it will decrease interest rates on its variable home loan products by 0.10 per cent.

The decrease will be effective from 23 August onwards and will put the Bank’s Flexible Home Loan variable reference rate at 4.93 per cent p.a. (comparison rate 4.95 per cent p.a.), positioning it between 0.29 - 0.36 per cent p.a. lower than the major banks.

ME Bank has stated that it retained some of the RBA’s cash rate cut to offset significant increases in other costs of doing business.

“The cost of retail deposits as a source of funding for loans has increased significantly over the last nine months,” ME CEO Jamie McPhee said.

“Retail deposit costs will increase further over the next 18 months as banks meet new legislation that require them to source more funds for loans from longer-term retail deposits, driving up market demand.

“This is particularly true for ME, which has always maintained deposit rates near the top of the market.

“The cost of funding from money markets – ‘term securitisation’ and ‘warehousing’ – has also risen sharply.”

Mr McPhee said that like any business, banks need to adjust their prices when input costs rise. He believes ME’s decision strikes the right balance between the cut to the cash rate and rising funding costs.

“ME customers will continue to receive one of the lowest standard variable interest rates in the market, while we maintain a fair return for our industry super fund shareholders and their members,” he said.

[Related: Majors under attack over meagre rate cuts]

 

Non-majors reduce variable rates
mortgagebusiness

Latest News

NAB chairman Philip Chronican has said the bank is intent on recovering lost ground in the home lending space, conceding that it needs to ...

With the bedrock of Australia’s retirement system relying on home ownership, indefinitely delaying buying a home can have negative effects...

ANZ chief executive Shayne Elliott has revealed that he was sent three remediation letters from the bank, insisting that the company will re...

FROM THE WEB
podcast

LATEST PODCAST: Vertical integration and the rise of neobanks

Do you think the mortgage market will see more consolidation this year?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.