Bank announces rate hikes of up to 40bps

MyState Bank has announced rate increases on new principal and interest home loans with a loan to value ratio (LVR) of over 90 per cent, and on all of its interest-only mortgage offerings.

Effective today (27 February), an increase of 40 basis points will apply for new variable, owner-occupied principal and interest home loans where the LVR is above 95 per cent.  

In addition, where the LVR of the loan is 95 per cent and above, there will be no cash out available and maximum debt-to-income (DTI) allowed of 4.00.

MyState has also announced a further rate increase of 25 basis points on new variable rate loans (owner occupied P&I) where the LVR is between 90 per cent and 95 per cent.

Variable mortgage products with an LVR of 90 per cent or above now start from 4.84 per cent (4.91 per cent comparison rate).

MyState noted that interest rates on loans with an LVR of up to 90 per cent, where the payments are principal and interest, will remain unchanged.

However, the bank has announced a mortgage rate increase of 10 basis points on new, variable rate loans with interest-only terms for both owner-occupiers and investors.

MyState’s interest-only home loans now start from 4.18 per cent (3.94 per cent comparison rate).

The bank added that any pipeline applications received up to 26 February will be applied with former rates, subject to being unconditionally approved by 5pm AEST Tuesday, 12 March.

MyState has now announced two out-of-cycle mortgage rate increases in 2-10, after lifting variable home loan rates by up to 16 basis points in January.

The bank has attributed its rate hikes to the sustained increase in wholesale funding costs, which weighed on the bank’s 2019 half-year (HY19) financial performance.

MyState’s net profit after tax (NPAT) declined by 9 per cent to $14.4 million, despite a 10.3 per cent rise in home lending volumes.

The Tasmanian-based bank is the latest lender to announce rate increases in 2019, with NAB and its subsidiary UBank, Macquarie, the Bank of Queensland, Virgin Money, and ING announcing rate increases off the back of funding costs pressures.

 [Related: MyState profit dragged down by funding costs]