ING to hike mortgage rate for homeowners, but cut investor rates

ELLIE MCLACHLAN


ING will be introducing home loan interest rate changes this Thursday. Some homeowners with low deposits might feel the pinch, but investors coming back into the property market could benefit from lower rates.

ING changing home loan rates
ING is set to change some home loan rates. Image source: nitpicker/Shutterstock.com.

ING will change some of its home loan interest rates for new customers only, effective Thursday, 4 February.

The only change for homeowners (owner-occupiers) will be an increase of 0.11 percentage points to variable rate loans of at least $150,000 with a loan-to-value ratio (LVR) of more than 90%. That LVR equates to a low deposit of less than 10% of the property’s value.

Canstar finance expert Steve Mickenbecker said this move was unsurprising given banks are increasingly basing interest rate pricing on risk, meaning they are looking for “quality” borrowers – people they see as unlikely to fall behind on their repayments.

Lenders are aggressively chasing market share at the moment, but they want borrowers that are at the quality end of the market,” Mr Mickenbecker said.

ING joins Adelaide Bank, Credit Union SA, Freedom Lend, Homestar Finance, Newcastle Permanent, People’s Choice Credit Union and QBank in increasing owner-occupier rates for principal and interest repayments so far this year, according to Canstar’s database.

Investors looking to refinance or take up a new loan with ING, on the other hand, will find lower rates than before, with cuts of between 0.05 and 0.80 percentage points coming in across a range of variable and fixed rates.

Mr Mickenbecker said if banks really want to increase their loan books, it makes sense to now not only target homeowners, but also investors who are returning to the market after the COVID-19 slump.

The home loan interest rate competition has been intense among the banks in recent months, as they try to snap up more customers with record-low fixed rates, while bank funding from the Reserve Bank is still cheap.

“Investors have been slower to come into the market during this phase of economic recovery, but the last couple of months there have been indications that they are returning,” Mr Mickenbecker said.

“Inevitably, some investors will be looking at prices now and saying ‘we don’t think prices are going to come off that much more now and we’ve got more confidence in prices holding up, so now’s the time to go into the market’.

“So it makes sense to try and get those investors on board and coming to your organisation as a lender.”

What are ING’s new home loan rates?

To summarise, the following changes will occur for new ING home loan customers on Thursday, 4 February, but existing customer rates will not be affected:

Owner-occupier rate changes

  • Increase of 0.11 percentage points, from 2.94% to 3.05% (comparison rate 3.39%): Orange Advantage variable loan for >90% LVR with offset account and principal and interest repayments.
  • Increase of 0.11 percentage points, from 2.89% to 3.00% (comparison rate 3.03%): Mortgage Simplifier variable loan for >90% LVR and principal and interest repayments.

Investor rate changes

  • Decrease of 0.05 percentage points off Orange Advantage and Mortgage Simplifier variable loans for loans above $150,000, across principal and interest and interest-only repayment types.
  • Decrease of 0.15 and 0.80 percentage points off all fixed rate mortgages (one, two, three, four and five-year terms) with principal and interest and interest only repayments.

These changes mean ING’s lowest investor variable rate will be 2.64% (comparison rate 2.67%) for loans of at least $150,000 paid off in principal and interest repayments.

The lowest ING fixed rate for investors will be 2.34% for one, two and three-year fixed loans with principal and interest repayments (comparison rates of 4.56%, 4.35% and 4.16%, respectively).

Some of the top home loan rates on Canstar’s database

To see how ING’s rate changes stack up, it may be helpful to take a look at what the top interest rates are for other variable rate owner-occupier loans, as well as investment loans.

Top 5 lowest owner-occupier variable home loan rates

Lender Loan LVRs Allowed Rate Comparison Rate
Reduce Home Loans Rate Cutter Variable <60% Up to 60% 1.77% 1.83%
Homestar Finance Star Gold Home Loan <60% Up to 60% 1.79% 1.84%
Pacific Mortgage Group Variable P&I <60% Up to 60% 1.89% 1.89%
Northern Inland Credit Union Dream Value Owner Occupied PI <60% Special Offer Up to 60% 1.89% 2.28%
Freedom Lend Freedom Variable PI 70% Up to 70% 1.97% 1.97%

Source: www.canstar.com.au – 3/02/2021. Based on owner-occupier variable home loans on Canstar’s database available for a loan amount of $400,000 and principal & interest repayments. Excludes first home buyer-only loans. Comparison rates calculated based on a $150,000 loan amount over a total loan term of 25 years. One product per provider is listed. Top 5 selected and table sorted in ascending order by rate, followed by comparison rate. LVR (loan-to-value ratio) refers to the home loan amount as a percentage of the property’s value. 

Top 5 lowest investment home loan rates

Lender Loan LVRs Allowed Rate Comparison Rate
Northern Inland Credit Union Dream Value Investor PI <60% Special Offer Up to 60% 1.89% 2.28%
loans.com.au Smart Booster Investor Bundle Intro 1 yr* Up to 80% 1.99% 2.71%
LCU Introductory Investment Home Loan 3 yrs Fixed Up to 80% 1.99% 3.12%
UBank Inv UHomeLoan Fixed 3 yrs P&I Up to 80% 2.09% 2.60%
RACQ Bank Choices Investment Fixed 3 yrs 20k+ Up to 90% 2.09% 4.21%

Source: www.canstar.com.au – 3/02/2021. Based on investment home loans on Canstar’s database available for a loan amount of $400,000 and principal & interest repayments. Excludes first home buyer-only loans. Comparison rates calculated based on a $150,000 loan amount over a total loan term of 25 years. One product per provider is listed. Top 5 selected and table sorted in ascending order by rate, followed by comparison rate. *loans.com.au’s Smart Booster Investor Bundle is available to customers who also have an owner-occupied loan with loans.com.au.


This article was reviewed by our Sub Editor Tom Letts before it was published, as part of our fact-checking process.

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