Banks unlikely to match RBI’s rate cut any time soon

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Mumbai: Indian bankers say piles of bad debt and the high cost of deposits mean they are unlikely to reduce interest rates on loans by as much as the central bank cut its key lending rate in a bid to spur growth.

The reluctance of bankers to pass on all of Thursday`s surprising 25 basis point rate cut is a potential blow to Prime Minister Narendra Modi`s government, which hopes lower lending rates will lift growth and job creation ahead of general elections due by May.

Making more credit available more cheaply is vital for Modi, who wants to please businesses, farmers and individual borrowers.

Four senior public and private sector bankers told Reuters on Friday that they might only cut lending rates by 5-10 basis points. A move of that size would have a negligible impact in boosting credit, or in reducing refinancing costs.

“If there is a lot of (government) pressure, then I may cut by a notional 5-10 basis points,” said the head of a big state-run bank who asked for anonymity due to sensitivity of the subject.

“That may have a psychological impact on corporates but will not really help in boosting credit growth or lowering borrowing costs.”

For Modi and new Reserve Bank of India Governor Shaktikanta Das, who is keen to boost private investments by lowering rates, this poses a problem.

Economic growth has slowed, with private investments slumping and consumption gains muted. Annual industrial output growth in November rose 4.1 percent, down from October`s 8.4 percent.

For the banks – often stuck with bad loans and heavy provisioning – any cut in loan rates is unlikely without a corresponding fall in deposit rates, which will require cash conditions to improve significantly, say bankers.

And banks are reluctant to cut deposit rates in the fiscal year`s last quarter, as they are keen to shore up their books while not losing hefty deposits.

Indian banks price their benchmark loan rates, known as the marginal cost of funds based lending rate (MCLR), mainly based on the cost of deposits.

“MCLR might not come down significantly very soon as any meaningful change will depend on cost of funds,” said Parthasarathi Mukherjee, managing director and chief executive officer of private lender Lakshmi Vilas Bank.

Unless banking system liquidity rises, he said, “we are not seeing any substantial fall in lending rates across the board any time soon.”

Confidence in property industry at low point

A survey has found that at the end of 2018 confidence in Australia’s property industry fell to its lowest level in five years.

According to the ANZ/Property Council of Australia survey, overall confidence in the Australian property industry fell by 11.3% over the past 12 months, reaching its lowest point since September 2013.

The state with the strongest confidence in the property industry was found to be South Australia, followed by the ACT and Western Australia. The largest falls in confidence were experienced in Victoria and New South Wales.

Property Council of Australia chief executive, Ken Morrison, said that with the final report of the banking royal commission due in February, a NSW state election due March, and a federal election due in May, it’s important that the nation’s policy-makers support the property industry:

“The global economy headwinds are picking up, foreign investors have been turned away, credit availability has tightened, and our largest residential markets have softened rapidly.”

“It’s not the time to be making changes to policies which undermine certainty, confidence or incentives to invest in Australian property.”

ANZ head of Australian economics, David Plank, added that according to the survey, the availability of finance is forecast to worsen further over the coming year, along with house prices and construction activity.

“The survey also suggests that firms expect the next interest rate movement to be higher, though the conviction in this expectation has dropped from the last survey.”

“With risks around global trade tensions and questions over the sustainability of domestic household spending, we think any RBA move is still some time off.”

The findings of the ANZ and Property Council of Australia survey follow recent research from CoreLogic, which found that some of the weakest housing market conditions in a decade at the end of 2018.

NAB and other banks cut mortgage rates

National Australia Bank (NAB) last week cut fixed and variable mortgage interest rates on selected home loans. Other banks that also shifted their rates last week included AMP, Teachers Mutual Bank and Adelaide Bank.

NAB’s Base Variable Home Loan Special saw its interest rate reduced by 20 basis points to 3.79% p.a. (comparison rate 3.83% p.a.) for new owner occupiers with LVRs at 80% making principal and interest repayments.

At the same time, NAB reduced the interest rates on several fixed rate home loans for owner occupiers and investors by between 4 and 34 basis points.

The following interest rate changes were also seen last week:

  • AMP increased variable interest rates by 15 basis points for owner occupiers and investors paying new and existing principal and interest and interest only loans.
  • AMP also decreased fixed rates on selected Professional Package home loans by as much as 87 basis points, and on the Basic Fixed Rate Investment Loan (Principal & Interest) 3 Years by 88 basis points.
  • Teachers Mutual Bank cut rates on its 3, 4 and 5 Year Fixed Rate Home Loans for owner occupiers and investors by between 10 and 50 basis points.
  • Adelaide Bank cut fixed and variable interest rates on many of its home loans for owner occupiers and investors, with the cuts ranging from 5 to 92 basis points.

Two of Australia’s biggest banks have changed their mortgage rates

Considering a home loan with Macquarie Bank or ING? It may have just gotten cheaper.

Both banks have made changes to a wide variety of their mortgage rates, with Macquarie lowering rates by up to 60 basis points and ING by up to 40 basis points (see tables below).

ING has also increased a few of its home loan interest rates, by up to 11 points.

These interest rate changes apply to selected mortgage offers across:

  • Owner-occupied and investment loans
  • Principal-and-interest and interest-only loans

Looking at just two of the changes, here’s how they could affect the mortgage repayments on a 30-year, $400,000 loan:

Macquarie Bank ING
Product Basic Flyer Investment Loan Fixed (principal & interest, LVR 70-80%) 5 years Mortgage Simplifier Investment Loan (principal & interest, $150k+, LVR < 80%)
Old rate 4.74% 4.44%
New rate 4.14% 4.04%
Old repayments $750,304 $724,502
New repayments $699,151 $690,803
Difference $51,153 $33,699

Macquarie and ING v the market

So, how do Macquarie Bank and ING compare to other lenders in terms of interest rates?

Macquarie’s loan is priced at 4.14 per cent, while the average rate for all the five-year investment loans on RateCity is 4.82 per cent (as of 31 March 2019).

ING’s loan is priced at 4.04 per cent, while the average for all the variable principal-and-interest loans on RateCity is 4.72 per cent.

That said, it’s important to note that the cheapest mortgage isn’t always the best mortgage. Other factors to consider when weighing up a home loan include:

  • Loan fees (upfront fees, ongoing fees)
  • Loan features (such as offset account, redraw facility, additional repayments)
  • Lender customer service (branch access, call centre, online banking options)

Need help with your home loan?

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Macquarie Bank selected changes

Product Old advertised rate New advertised rate New comparison rate Change in advertised rate
Basic Flyer Home Loan Fixed 1 year (principal & interest, LVR 70-80%) 4.04% 3.94% 3.91% -10 points
Basic Flyer Home Loan Fixed 2 years (principal & interest, LVR 70-80%) 4.04% 3.84% 3.90% -20 points
Basic Flyer Home Loan Fixed 3 years (principal & interest, LVR 70-80%) 4.04% 3.84% 3.89% -20 points
Basic Flyer Home Loan Fixed 4 years (principal & interest, LVR 70-80%) 4.34% 3.94% 3.92% -40 points
Basic Flyer Home Loan Fixed 5 years (principal & interest, LVR 70-80%) 4.34% 3.94% 3.92% -40 points
Basic Flyer Investment Loan Fixed 2 years (principal & interest, LVR 70-80%) 4.34% 4.04% 4.33% -30 points
Basic Flyer Investment Loan Fixed 3 years (principal & interest, LVR 70-80%) 4.34% 4.04% 4.30% -30 points
Basic Flyer Investment Loan Fixed 4 years (principal & interest, LVR 70-80%) 4.64% 4.14% 4.31% -50 points
Basic Flyer Investment Loan Fixed 5 years (principal & interest, LVR 70-80%) 4.74% 4.14% 4.29% -60 points

ING selected changes

Product Old advertised rate New advertised rate New comparison rate Change in advertised rate
Orange Advantage Home Loan (principal & interest, $500k-$1m, LVR < 80%) 3.93% 3.85% 4.17% -8 points
Orange Advantage Home Loan (principal & interest, $1m+, LVR < 80%) 3.89% 3.81% 4.13% -8 points
Orange Advantage Home Loan (interest-only, ($150k-$500k, LVR < 80%) 4.33% 4.44% 4.75% +11 points
Orange Advantage Investment Loan (principal & interest, $150k+, LVR < 80%) 4.39% 4.09% 4.41% -30 points
Orange Advantage Investment Loan (interest-only, $150k+, LVR < 80%) 4.69% 4.49% 4.80% -20 points
Mortgage Simplifier Home Loan (principal & interest, $150k-$1m, LVR < 80%) 3.88% 3.80% 3.82% -8 points
Mortgage Simplifier Home Loan (interest-only, $150k-$500k, LVR < 80%) 4.28% 4.39% 4.41% +11 points
Mortgage Simplifier Investment Loan (principal & interest, $150k+, LVR < 80%) 4.44% 4.04% 4.06% -40 points
Mortgage Simplifier Investment Loan (interest-only, $150k+) 4.59% 4.44% 4.46% -15 points
Fixed Rate Investment Loan 3 years 4.19% 4.09% 5.48% -10 points
Fixed Rate Investment Loan 4 years 4.69% 4.59% 5.51% -10 points
Fixed Rate Investment Loan 5 years 4.69% 4.59% 5.41% -10 points

Student Loan Debt Could Affect Your Job in 13 States

A REAL CATCH-22 OF student loan debt exists in the 13 states with the ability to revoke a professional license in the case of student loan default. If people are unable to work in their chosen field – the one they went to school for and presumably took out loans to fund – how can they be expected to pay their debt?

According to the National Conference of State Legislatures, during the 1950s only 5% of U.S. workers were required to hold a license to practice their chosen profession. Today, that percentage has risen to more than 25%.

Nurses, teachers, hair stylists and travel guides are just a few of the types of professionals who require a license. The training necessary to obtain those licenses can be expensive, and many people are taking out student loans to cover the costs. Overall, student loan debt in the U.S. has risen to more than $1.5 trillion. More than 1 million people default on their student loans every year, according to a report from the Urban Institute, a nonprofit research organization.

In the 1990s, the federal government urged states to use their license revocation abilities to curb the growing tide of student loan default. More recently, however, many states have changed their laws to protect borrowers from this punitive tactic. Today, 13 states have these types of laws, although enforcement varies widely.

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Bipartisan legislation was reintroduced last month in Congress to prohibit states from revoking or denying professional licenses solely because of default on a federal student loan. And legislation passed in Alaska, Illinois, Kentucky, North Dakota, Virginia and Washington has already prohibited the practice in those states.

For now, these are the states that still have laws that allow professional license denial, suspension or revocation for defaulting on student loans, according to October 2018 research from the National Conference of State Legislatures:

  • Arkansas
  • California
  • Florida
  • Georgia
  • Hawaii
  • Iowa
  • Louisiana (only for defaulted state education loans)
  • Massachusetts
  • Minnesota
  • Mississippi
  • South Dakota
  • Tennessee
  • Texas

In Iowa and South Dakota, those in default can also have their driver’s and hunting licenses revoked over defaulted student loans.

How Student Loans Impact Your Taxes

Higher education is a major expense for many taxpayers. About 66 percent of college graduates from the class of 2017 took out student loans at an average of nearly $30,000, according to U.S. News data.

Whether you’re in school or the job force, student loans can help or hurt at tax time. Private and federal student loan borrowers stand to gain from tax breaks, but student loan debt can also cause a tax burden with forgiven or settled loans. Here’s what to know.

Tax Credits and Deductions for Students

Tax credits and deductions that apply to educational expenses could reduce your tax bill or increase your refund.

Tax credits. If you paid for education costs (with student loans or not), the IRS allows you to claim the American Opportunity Tax Credit and the Lifetime Learning Credit. Both are tax credits, which reduce the amount of your income subject to tax.

You can claim up to $2,500 each year for up to four years with the American Opportunity Tax Credit. If this credit reduces your income tax to less than zero, you could get a refund. Under the Lifetime Learning Credit, you can claim up to $2,000 per return. It can reduce your tax bill but won’t generate a refund.

Student loan interest deduction. If you pay interest on either private or federal student loans, the student loan interest deduction will let you reduce your taxable income by up to $2,500 annually.

“Congress understands that the cost of college is an incredibly high expense,” says Kristin Ingram, CPA and owner of Accounting In Focus, an accounting education website. “This is something they have provided to help people with that expense.”

When you reduce the amount of your income subject to taxes, you won’t have to pay taxes on that income. And it could push you to a lower tax bracket, which could translate to even more tax savings, Ingram says.

To claim the deduction, you must have used the loan to pay for qualified education expenses for you, your spouse or dependent. Your loan servicer should send you a Form 1098-E that shows how much interest you paid during the tax year. If you used a credit card to pay for qualified expenses and paid interest on the debt, the IRS says you can claim that interest, too.

There are two downsides to the student loan interest deduction, Ingram says. You can only claim the $2,500 deduction once per return, whether you’re single or filing jointly. That means if you’re paying student loans for yourself and a spouse, you’ll only get to claim it once.

What’s more, the deduction starts decreasing as you earn more income. Once your modified adjusted gross income is $80,000 or more filing single, or $165,000 or more filing jointly, you’re not eligible for the credit at all. “People who tend to rack up a lot of loans are the people who are probably going to hit those thresholds,” Ingram says. “So they still have those payments, but they don’t get the benefit of that deduction.”

If your parents helped pay for your school costs, then you’ll need to consider who will claim the tax credits along with the student loan interest deduction. It can be either you or your parents, but not both. The answer comes down to:

  • Dependent status. To qualify for these tax breaks, you can’t be listed as a dependent on someone else’s tax return.
  • Filing status. Filing separately means you can’t claim any of these three education tax breaks.
  • Income. Tax breaks usually have income limits, so you’ll have to compare your income against your parents’. If one of you meets the income requirements, you can claim the tax break as long as you fit any other qualifications.

Your Tax-Filing Status Can Impact Your Student Loan Payment

Federal student loan borrowers have a lot of flexibility in repayment, including four income-driven repayment plans that limit monthly payments to a percentage of the borrower’s income reported to the IRS. After the borrower makes on-time payments for 20 to 25 years, the government will forgive any remaining balance.

If you have a federal student loan and file a joint return with a spouse, the Department of Education bases your payment on the two incomes combined. If your joint income increases enough after you get married, your payment may increase substantially or the income may even disqualify you from certain repayment programs. The Department of Education does help you a little here by prorating your loan payment if your spouse is also paying off a federal student loan. But if you and your spouse decide to file separately, the monthly payment will be based on just your income.

There’s one exception: The Revised Pay As You Earn Plan doesn’t take into account whether you file jointly or separately. It will base your payment on the combined income of you and your spouse.

Mark Gianno, CPA and president of financial services company Gianno & Freda, has a client who is married but filing separately specifically to get a lower federal student loan payment. “In the process, he’s giving up an awful lot to get the forgiveness,” Gianno says. For example, separate filers will generally pay a higher tax rate, can’t claim certain credits and deductions (such as the student loan interest deduction), and may get a reduced child tax credit. And once the loan is forgiven, Gianno says, there’s a tax hit: The forgiven amount will generally be considered taxable income.

If two people have “radically different income” and the person with the lower income has a large student loan, then it might be worth it, Ingram says.

Settled or Forgiven Student Loans Can Lead to Bigger Tax Bills

There are two main ways to pay less than originally agreed on your student loans: debt settlement and loan forgiveness.

If you default on a student loan, meaning you’ve missed several payments, you may be able to negotiate debt settlement. That means the lender will accept a smaller lump sum as payment in full. But while it’s possible, it’s not guaranteed, and your credit rating will take a major hit as you miss payments.

Loan forgiveness is a program for federal student loan borrowers. After you’ve made payments for 20 to 25 years, the government will forgive any remaining balance on the loan.

But here’s one of the major downsides to settled and forgiven loans: The IRS will count any discharged debt as taxable income. So if you’re in the 22 percent tax bracket and your $40,000 loan was forgiven, you’ll owe $8,800 in additional taxes.

You may qualify for an exemption, such as insolvency, that allows you to exclude the discharged debt from your gross income. You’re considered insolvent if the fair market value of your total assets is less than your total debt. “If you are still fairly new out of school and living in an apartment and trying to scratch out a living,” Gianno says, “you can probably show insolvency, if you don’t really own anything.”

Here’s some good news: If you have federal student loans and can qualify for the federal Public Service Loan Forgiveness program, the government will forgive your remaining loan balance after you make 120 qualifying payments. Under this program, you won’t owe taxes on the balance. This program was created “to increase the talent pool for potential employees in the public service,” Gianno says.

Student Loans Aren’t Considered Taxable Income – But What Else Is?

The IRS defines income as just about any money you receive: wages, salaries, commissions, fees, tips and more. Taxable income is any income left over after you’ve subtracted allowable deductions and adjustments.

When you tap into methods of paying for school, you’ll need to consider whether the IRS will see the funds as taxable income. Here are two examples of what generally is and isn’t taxable:

Student loans, scholarships and grants: generally not taxed. Student loans, whether private or federal, generally won’t be considered taxable income because they’ll be repaid at some point. Of course, if the debt is later discharged, you may have to pay income taxes on the balance. Academic scholarships and grants generally aren’t considered taxable income, but a few rules apply. You must be a degree-seeking student at an eligible institution, use the funds only for qualified expenses and meet a few other requirements.

Employer-provided perks: generally taxed. If your employer either foots your tuition bill for higher education or offers a benefit that helps you pay for student loans with an educational assistance program, these funds may be taxable. You won’t have to pay taxes on the first $5,250 of an educational assistance program, but you’ll generally have to pay taxes on benefits that exceed that amount. On the other hand, 100 percent of student loan repayment assistance is viewed as taxable income.

Consider Planning Before Taking Out Loans

If you’re still in school and haven’t taken out many student loans, Ingram suggests taking a look at what your budget might look like after graduation.

“People spend so much time focusing on student loans after they’ve already got them,” she says. “They try to figure out how to repay them and what tax deductions to take.” She says the smarter move is to spend more time thinking about these details before taking out a loan.

ME Bank cuts mortgage rates

ME Bank has reduced its home loan interest rates by up to 50 basis points, which could lower the cost of a typical mortgage by $42,000.

ME Bank has made changes to its:

  • 1-year fixed rates
  • 2-year fixed rates
  • 3-year fixed rates
  • 4-year fixed rates
  • 5-year fixed rates

Most of the interest rate cuts apply to owner-occupiers, although there are also some cuts for investors (see table below).

The Member Package five-year fixed rate has fallen from 4.49 per cent to 3.99 per cent (comparison rate 4.37 per cent).

If that rate cut was applied to a 30-year, $400,000 mortgage, the total repayments over the life of the loan would fall from $728,771 to $686,648, resulting in a saving of $42,123.

Product Loan type Old advertised rate New advertised rate New comparison rate Change to advertised rate
Flexible Home Loan fixed 1 year (LVR < 80%) Owner-occupied 4.14% 3.99% 5.02% -15 points
Flexible Home Loan fixed 2 years (LVR < 80%) Owner-occupied 3.99% 3.89% 4.90% -10 points
Flexible Home Loan fixed 3 years (LVR < 80%) Owner-occupied 4.14% 3.94% 4.82% -20 points
Flexible Home Loan fixed 4 years (LVR < 80%) Owner-occupied 4.44% 4.14% 4.80% -30 points
Flexible Home Loan fixed 5 years (LVR < 80%) Owner-occupied 4.64% 4.14% 4.73% -50 points
Flexible Investment Loan fixed 4 years (principal & interest) Investment 4.74% 4.54% 5.42% -20 points
Member Package Flexible Home Loan fixed 1 year (principal & interest) (LVR < 80%) Owner-occupied 3.99% 3.84% 4.34% -15 points
Member Package Flexible Home Loan fixed 2 years (principal & interest) (LVR < 80%) Owner-occupied 3.84% 3.74% 4.31% -10 points
Member Package Flexible Home Loan fixed 3 years (principal & interest) (LVR < 80%) Owner-occupied 3.99% 3.79% 4.31% -20 points
Member Package Flexible Home Loan fixed 4 years (principal & interest) (LVR < 80%) Owner-occupied 4.29% 3.99% 4.37% -30 points
Member Package Flexible Home Loan fixed 5 years (principal & interest) (LVR < 80%) Owner-occupied 4.49% 3.99% 4.37% -50 points
Member Package Flexible Investment Loan fixed 4 years (principal & interest) Investment 4.59% 4.39% 4.73% -20 points

ME Bank interest rates are lower than average

ME Bank’s home loan rate cuts mean that its fixed-rate mortgages now have significantly lower interest rates than the industry average.

Here’s how ME Bank compares to the average interest rate of all the different fixed-rate home loans listed on RateCity:

Loan Loan type RateCity average ME Bank Difference
1-year fixed Owner-occupied 4.18% 3.84% 34 points
2-year fixed Owner-occupied 4.14% 3.74% 40 points
3-year fixed Owner-occupied 4.22% 3.79% 43 points
4-year fixed Owner-occupied 4.55% 3.99% 56 points
4-year fixed Investment 4.81% 4.39% 42 points
5-year fixed Owner-occupied 4.60% 3.99% 61 points

ME Bank’s interest rate changes took effect on March 29.

Lenders offering 3-year mortgages from as low as 3.69%

Australia’s big four banks and a host of challenger lenders are offering three-year fixed-rate home loans for under 4 per cent.

The three-year home loans with the lowest interest rates are for owner-occupiers with a maximum loan-to-value ratio (LVR) of 80 per cent.

Both Westpac and Commonwealth Bank have three-year mortgages with advertised rates starting from 3.89 per cent (see table below).

NAB and ANZ have three-year interest rates as low as 3.99 per cent.

Three-year fixed-rate home loans – big four banks

Lender Advertised rate Comparison rate
Westpac 3.89% 4.92%
Commonwealth Bank 3.89% 5.01%
NAB 3.99% 4.86%
ANZ 3.99% 5.02%

Owner-occupiers with a maximum LVR of 80 per cent could potentially get even lower interest rates from a range of challenger lenders.

For example, both Easy Street Financial Services and Community First Credit Union are pricing their three-year fixed-rate home loans as low as 3.69 per cent (see table below).

UBank and IMB Bank have three-year mortgages from 3.74 per cent, QBank from 3.75 per cent, Auswide Bank from 3.76 per cent, and Reduce Home Loans, Freedom Lend, RACQ Bank and Suncorp Bank from 3.79 per cent.

Three-year fixed-rate home loans – challenger lenders

Lender Advertised rate Comparison rate
Easy Street Financial Services 3.69% 4.13%
Community First Credit Union 3.69% 4.93%
UBank 3.74% 4.01%
IMB Bank 3.74% 4.49%
QBank 3.75% 4.36%
Auswide Bank 3.76% 4.59%
Reduce Home Loans 3.79% 4.08%
Freedom Lend 3.79% 4.48%
RACQ Bank 3.79% 4.75%
Suncorp Bank 3.79% 4.78%

Please note that the cheapest three-year home loan won’t necessarily be the best home loan for your situation.

February finishes with mortgage rate rises

Several lenders increased variable interest rates on selected home loans in the last week of February, though there were also cuts to some fixed rate loans.

Auswide increased both its fixed and variable rates for owner occupiers and investors, with the smallest increase being by 3 basis points, and the largest increases being by 30 basis points.

Auswide Home Loan New Rate New CR Old Rate Old CR Rate changes
Freedom Package Home Loan Plus Discount Fixed (Principal and Interest) 3 Years 3.79 4.6 3.76 4.59 0.03
Freedom Package Home Loan Plus Discount Variable (Principal and Interest) (LVR < 90%) 3.69 4.08 3.64 4.03 0.05
Home Loan Plus (Interest Only) 5.61 5.76 5.48 5.63 0.13
Home Loan Plus (Principal and Interest) 5.61 5.76 5.48 5.63 0.13
Line of Credit Home Loan 6.06 5.93 0.13
Line of Credit Investment Loan 6.58 6.45 0.13
Freedom Package Home Loan Plus (Principal and Interest) (LVR 90%-95%) 4.53 4.9 4.38 4.76 0.15
Investment Loan Plus (Interest Only) 6.39 6.54 6.23 6.38 0.16
Investment Loan Plus (Principal and Interest) 6.39 6.54 6.23 6.38 0.16
Freedom Package Home Loan Plus Fixed (Principal and Interest) 4 Years (LVR 90%-95%) 4.9 4.94 4.7 4.87 0.2
Freedom Package Home Loan Plus Fixed (Principal and Interest) 5 Years (LVR 90%-95%) 5 5.01 4.8 4.93 0.2
Freedom Package Home Loan Plus Fixed (Principal and Interest) 1 Year (LVR 90%-95%) 4.39 4.76 4.09 4.73 0.3
Freedom Package Home Loan Plus Fixed (Principal and Interest) 2 Years (LVR 90%-95%) 4.49 4.78 4.19 4.72 0.3
Freedom Package Home Loan Plus Fixed (Principal and Interest) 3 Years (LVR 90%-95%) 4.49 4.78 4.19 4.71 0.3

Several of MyState Bank’s variable interest rates were also increased this week, with selected interest-only home loans seeing rate rise by 10 basis points, while some principal and interest loans increased their interest by 25 basis points.

MyState Bank Home Loan Rate New CR Old Rate Old CR Rate change
Basic Variable Home Loan (Interest Only) (LVR < 80%) 4.18 3.94 4.08 3.93 0.1
Basic Variable Investment Loan (Interest Only) (LVR < 80%) 4.38 4.16 4.28 4.15 0.1
Basic Variable Investment Loan (Interest Only) (LVR 80%-90%) 4.58 4.38 4.48 4.37 0.1
Special Residential Home Loan (Interest Only) (LVR < 80%) 4.38 4.16 4.28 4.15 0.1
Special Residential Investment Loan (Interest Only) (LVR < 80%) 4.58 4.36 4.48 4.35 0.1
Special Residential Investment Loan (Interest Only) (LVR 80%-90%) 4.78 4.58 4.68 4.57 0.1
Standard Variable Home Loan (Interest Only) 5.62 5.42 5.52 5.41 0.1
Standard Variable Investment Loan (Interest Only) 5.62 5.42 5.52 5.41 0.1
Basic Variable Home Loan (Principal and Interest) (LVR 90%-95%) 4.64 4.71 4.39 4.46 0.25
Special Residential Home Loan (Principal and Interest) (LVR 90%-95%) 4.84 4.91 4.59 4.66 0.25

However, People’s Choice Credit Union cut fixed rates on selected loans by 5 to 10 basis points this week.

People’s Choice Credit Union Home Loan Rate New CR Old Rate Rate change
2 Year Fixed Package (Owner Occupied, Principal & Interest) 3.69 4.66 3.79 -0.10
2 Year Fixed Package (Investment, Principal & Interest) 3.84 5.20 3.94 -0.10
First Home Buyer 3 Year Fixed Package (Owner Occupied, Principal & Interest) 3.84 4.64 3.89 -0.05
First Home Buyer 3 Year Fixed Package (Owner Occupied, Interest Only) 4.34 5.16 4.39 -0.05
Home, Construction & Low Doc 2 Year Fixed (Owner Occupied, Principal & Interest) 3.84 5.17 3.94 -0.10

These changes wrap up a February where several lenders adjusted their interest rates up or down, including Suncorp, Bendigo Bank and Credit Union SA, St.George and AMP, Macquarie Bank and ME Bank.

Lenders adjust fixed home loan interest rates

Several Australian banks have adjusted their home loan interest rates this week, with some lenders lowering their fixed rates, while others increased theirs.

St.George this week reduced some of its fixed interest rates, including the 2 Year Owner Occupier Principal & Interest home loan, which went down by 0.06% p.a., as well as the 2 Year Residential Investment Principal & Interest, whose rate was reduced by 0.10% p.a.

St.George fixed rates that increased  by 0.10% each included the 5 Year Residential Investment Interest Only, as well as the 5 Year Portfolio Loan.

Loan New interest rate New comparison rate Old interest rate Old comparison rate Change
St.George Owner Occupier Standard Fixed Rate 2 Year (Principal & Interest) 3.84% 5.24% 3.90% 5.25% -0.06%
St.George Residential Investment Standard Fixed Rate 2 Year (Principal & Interest) 4.04% 5.72% 4.14% 5.74% -0.10%
St.George Residential Investment Standard Fixed Rate 5 Year (Interest Only) 5.14% 6.05% 5.04% 6.01% +0.10%

AMP also adjusted the fixed interest rates on its professional package investment loans, with the largest decrease being by -0.75% over three years.

Loan New interest rate New comparison rate Old interest rate Old comparison rate Change
AMP Professional Package Investment Loan Fixed (Interest Only) 2 Years 4.17% 5.35% 4.77% 5.46% -0.6%
AMP Professional Package Investment Loan Fixed (Interest Only) 3 Years 4.19% 5.24% 4.49% 5.32% -0.3%
AMP Professional Package Investment Loan Fixed (Principal and Interest) 2 Years 3.99% 5.32% 4.57% 5.43% -0.58%
AMP Professional Package Investment Loan Fixed (Principal and Interest) 3 Years 4.12% 5.23% 4.87% 5.43% -0.75%

These adjustments to fixed interest rates follow several changes to variable interest rates earlier in the month, with Macquarie Bank, ME Bank and ING raising some of their variable rates, while Heritage Bank lowered some of its variable rates for investors.