ME Bank has announced that it has made rate cuts of up to 40 bps across its one-, two- and three-year fixed-rate mortgages.
New and refinancing owner-occupier borrowers on principal and interest loans with a loan-to-value ratio of 90 per cent or less are eligible.
The bank’s new fixed rates are now a flat 2.19 per cent for borrowers who lock in one-, two- or three-year fixed terms.
This applies to new and existing fixed-rate owner-occupiers on principal and interest loans with a member package.
Non-member packages will include a 15 bps premium applied to them, with fixed rates now at a flat 2.34 per cent across one-, two- and three-year fixed rates.
Commenting on the rate reduction, ME Bank general manager home lending Andrew Bartolo said: “Many customers are looking for the increased certainty of a low fixed rate, but for shorter periods.”
“The offer will help first home buyers achieve their dream of home ownership faster by only requiring a 10 per cent deposit (with LMI [lender’s mortgage insurance]), put more money back in their pockets through a lower rate, and give them peace of mind with certainty on exactly what their repayments will be a year or more in advance.”
The changes came into effect on 21 August. Applications that are in progress will receive the new lower fixed rate if settlement occurs on or after this date.
A $395 annual fee applies to the member package.
ME Bank’s decision is in line with several lenders who have been slashing both fixed and variable rates following the Reserve Bank of Australia’s cuts to the cash rate in March.
However, Teachers Mutual Bank Ltd (TMBL) bucked this trend, raising interest rates across two- and three-year fixed owner-occupied and investment home loans by 5 bps in May.
According to recent research by online broking platform Lendi, on average, the median interest rate offered by lenders fell by 35 bps over the six months to 30 June.
However, over the same period, median interest rates charged by the big four banks were 8 bps higher than rates charged by non-majors.
The interest rate gap was at its highest in March at 12 bps, before narrowing to just 2 bps in April following two cash rate cuts by the RBA in March.
However, the gap returned to an average of 8 bps by the end of June, which the research attributed to attractive refinancers with cashback offers and low fixed rates at the peak of uncertainty during the COVID-19 crisis.
[Related: Borrowers fail to cash in on lower rates]
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.