Lender increases IO variable rates by 30 bps

Citibank is set to introduce a series of changes to its home loan variable rates for clients making principal and interest repayments and interest-only repayments.

Effective 1 August, customers paying variable interest-only repayments and customers with line of credit products will see rates go up by 0.30 per cent per annum (p.a.), provided loans were settled before 1 May 2017.

The new variable rate for clients with Mortgage Plus loans will be 4.96 per cent p.a. for standard variable/standard variable offset products. Clients with Mortgage Power – line of credit products will see rates of 5.06 per cent p.a.

For clients without Mortgage Plus, the Basic Variable rate will become 5.01 per cent p.a.

Meanwhile, customers paying variable principal and interest repayments will see rates fall by 0.10 per cent p.a. for loans settled before 1 May 2017.

Clients with Mortgage Plus, standard variable/standard variable offset loans will see rates drop to 4.16 per cent p.a., while those without Mortgage Plus, Basic Variable loans will see rates fall to 4.21 per cent p.a.

Cash out and LVR changes

The core maximum loan-to-value ratio (LVR) has been reduced by 15 per cent for new units in all locations, including high-density units in specified postcodes, regardless of age, and units purchased from a property developer, also regardless of age, effective immediately.

Currently, the maximum LVR at Citibank is 90 per cent.

Citibank is also making changes to cash out rules, effective immediately. Cash out loans will not be permitted for customers with a maximum borrower exposure of less than $500,000.

Clients looking to increase existing mortgage facilities are now, and until further notice, only able to make principal and interest repayments.

Matt Wood, head of mortgages distribution at Citibank Australia, said that the updated rates and policies were introduced to “reflect changes in the market and regulatory conditions”.

These changes follow rate moves by Westpac, its subsidiaries and Suncorp on 26 July.

[Related: Major bank raises investor rates by 31 basis points

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Lucy Dean

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