Beware: Home Loan Rates On The Rise

Several of Australia’s major banks and other lenders have increased their home loan interest rates by up to 0.50%.

home loans interest rates rise

CommBank raises rates

Commonwealth Bank, Australia’s largest mortgage lender, has raised interest rates on fixed rate investment home loans by 50 basis points for most Interest-Only products, with the 1-year fixed rate term having risen by a smaller 25 basis points.

Fixed rate Principal & Interest investment loans are also affected, with all fixed terms ranging from 2 to 5 years seeing a rate rise of 0.25%.

For owner occupiers, all Interest-Only, fixed rate home loans have seen rates increase by 25 basis points across the board, with all rate changes effective from Friday 21 April.

Principal & Interest home loans are not affected.

The CommBank changes may have significant cost ramifications for new CBA customers. For example, taking out a new $500,000 principle and interest home loan over 25 years, with a 5-year fixed rate period, could now cost approximately $880 extra per year at current interest rates (CANSTAR Mortgage Calculator).

Commonwealth Bank has reported that the rate changes – the majority of which are to Interest-Only loans – have been prompted by new regulatory requirements introduced by the Australian Prudential Regulation Authority (APRA).

In late March, APRA announced several new regulatory recommendations for mortgage lending by Australian banks. These included:

  • Limiting Interest-Only mortgages to less than 30% of all new home loans
  • Placing strict limits on Interest-Only LVRs of 80 percent or greater
  • Continuing to limit growth of investment lending to below 10%

The APRA regulatory changes were aimed at limiting the proliferation of Interest-Only loans in Australia during our current period of record low interest rates.

Interest-Only loans are designed primarily for investors, and can quickly become unaffordable for residential home owners once interest rates begin to rise.

Other banks following suit with higher rates

CommBank is not the only lender to change their rates. Over the past week, our full list of banks and lenders to increase interest rates on selected home loan products includes:

  • ANZ
  • Arab Bank Australia
  • Australian Military Bank
  • Bank Australia
  • BOQ
  • CommBank
  • Freedom Lend
  • Holiday Coast Credit Union
  • com.au
  • Hume Bank
  • iMortgage
  • Newcastle Permanent
  • UBank
  • Westpac

Westpac has introduced changes to a large number of home loans, with interest rates increasing by as much as 0.30% on some products and others decreasing by about the same amount (-0.31%). The majority of changes are smaller, with most investment loans and ‘Fixed Options’ loans increasing by 10 basis points (0.10%).

Newcastle Permanent, meanwhile, has increased the majority of their Residential Fixed Interest-Only loans by 10 basis points (0.10%). Meanwhile, their Principal & Interest 1-year fixed rate loan has had its rate reduced by the same amount (-0.10%).

Hume Bank have introduced rate changes to several types of loans. The largest mover is the 3-year fixed rate investment loan, which increased by 0.21%, whilst the majority of residential and investment fixed rate loans will see increases or decreases of 0.10%.

The full changes to interest rates are summarised below:

Commonwealth Bank Rate Changes

Company Product Name New Rate (%) Change (%) Comparison Rate (%)
CommBank Fixed IO 1 yr 4.64 0.25 5.33
CommBank Fixed IO 2 yr 4.24 0.25 5.21
CommBank Fixed IO 3 yr 4.34 0.25 5.17
CommBank Fixed IO 4 yr 4.64 0.25 5.22
CommBank Fixed IO 5 yr 4.84 0.25 4.99
CommBank Fixed P&I 2 yr 4.44 0.25 5.17
CommBank Fixed P&I 3 yr 4.54 0.25 5.11
CommBank Fixed P&I 4 yr 4.84 0.25 5.13
CommBank Fixed P&I 5 yr 5.04 0.25 5.17
CommBank Inv Economiser Intro Variable P&I 3 yr 4.85 0.12 5.13
CommBank Investment Fixed IO 1 yr 4.84 0.25 5.65
CommBank Investment Fixed IO 2 yr 4.69 0.5 5.57
CommBank Investment Fixed IO 3 yr 4.79 0.5 5.54
CommBank Investment Fixed IO 4 yr 5.09 0.5 5.60
CommBank Investment Fixed IO 5 yr 5.29 0.5 5.66
CommBank Viridian Line of Credit 5.82 0.04 6.01
Source: www.canstar.com.au as at 24 April 2017.

Westpac Rate Changes

Company Product Name New Rate (%) Change (%) Comparison Rate (%)
Westpac Investment Fixed IO 1 yr 4.66 0.1 5.96
Westpac Investment Fixed IO 2 yr 4.66 0.1 5.84
Westpac Investment Fixed IO 3 yr 4.76 0.1 5.76
Westpac Investment Fixed IO 4 yr 5.06 -0.17 5.77
Westpac Investment Fixed IO 5 yr 5.06 0.1 5.71
Westpac Investment Fixed IO 6 yr 6.47 0.1 6.35
Westpac Investment Fixed IO 7 yr 6.97 0.1 6.67
Westpac Investment Fixed IO 9 yr 6.97 0.1 6.78
Westpac Investment Fixed IO 10 yr 6.97 0.1 6.83
Westpac Investment Fixed P&I 2 yr 4.08 -0.31 5.60
Westpac Investment Fixed P&I 4 yr 4.79 -0.27 5.57
Westpac Fixed Options IO 1 yr 4.66 0.3 5.54
Westpac Fixed Options IO 2 yr 4.66 0.3 5.47
Westpac Fixed Options IO 3 yr 4.76 0.3 5.43
Westpac Fixed Options IO 4 yr 5.06 0.1 5.47
Westpac Fixed Options IO 5 yr 5.06 0.3 5.44
Westpac Fixed Options IO 7 yr 6.97 0.1 6.47
Westpac Fixed Options IO 10 y 6.97 0.1 6.70
Westpac Fixed Options P&I 2 yr 4.08 -0.11 5.22
Westpac Fixed Options P&I 4 yr 4.59 -0.2 5.20
Source: www.canstar.com.au as at 24 April 2017.

Newcastle Permanent Rate Changes

Company Product Name New Rate (%) Change (%) Comparison Rate (%)
Newcastle Permanent Residential Fixed IO 4 yr 4.59 0.1 5.26
Newcastle Permanent Residential Fixed IO 5 yr 4.59 0.1 4.86
Newcastle Permanent Residential Fixed IO 7 yr 6.99 0.1 6.51
Newcastle Permanent Residential Fixed IO 10 y 6.99 0.1 6.81
Newcastle Permanent Residential Fixed P&I 1 yr 3.89 -0.1 5.14
Source: www.canstar.com.au as at 24 April 2017.

Hume Bank Rate Changes

Company Product Name New Rate (%) Change (%) Comparison Rate (%)
Hume Bank Line Of Credit 5.8 0.6 5.21
Hume Bank Line Of Credit (Refinance) 5.8 0.6 5.21
Hume Bank Investment Fixed 3 yr 4.55 0.21 5.13
Hume Bank Investment Fixed 4 yr 4.95 0.1 5.23
Hume Bank Investment Fixed 5 yr 4.95 0.1 5.19
Hume Bank Investment Fixed (Refinance 3 yr) 4.55 0.21 5.08
Hume Bank Investment Fixed (Refinance 4 yr) 4.95 0.1 5.18
Hume Bank Investment Fixed (Refinance 5 yr) 4.95 0.1 5.14
Hume Bank Residential Fixed 2 yr 4.09 -0.1 4.98
Hume Bank Residential Fixed 3 yr 4.19 0.1 4.88
Hume Bank Residential Fixed (Refinance 2 yr) 4.09 -0.1 4.93
Hume Bank Residential Fixed (Refinance 3 yr) 4.19 0.1 4.83
Hume Bank Property Package Investment Fixed 3 yrs 150k+ 4.45% 0.21% 4.65
Hume Bank Property Package Investment Fixed 4 yrs 150k+ 4.85% 0.10% 4.80
Hume Bank Property Package Investment Fixed 5 yrs 150k+ 4.85% 0.10% 4.80
Source: www.canstar.com.au as at 24 April 2017.

 

Share this article

Enjoyed reading this article?

Sign up to receive more news like this straight to your inbox

By subscribing you agree to the Canstar Privacy Policy.

Thanks for signing up!

Good things are coming your way.