ME has announced it will increase its home loan interest rates for both new and existing borrowers by up to 18 basis points, effective 7 February.
The lender will also increase its advertised new business variable rates by 8 basis points, effective 4 February, following a 10 basis point increase to some advertised new business variable rates in December 2018.
ME CEO Jamie McPhee attributed the bank’s decision to the sustained rise in wholesale funding costs.
“The changes are in response to the sustained increase in the cost of funds,” he said.
“Bank bill swap rates (BBSW) – the key determinant of the cost of funds – have remained elevated.
“It was a difficult decision, but we have sought the right balance between delivering a strong customer value proposition across our product range while responding to the sustained increase in funding costs.”
This follows a move from ING Australia, which recently announced that, effective from Thursday, 7 February, it will increase its variable mortgage rates for all home loan customers by up to 15 basis points.
The bank’s revised variable home loan rate now starts from 3.93 per cent.
ING’s latest rate rise follows a 10 basis point increase in July 2018, in line with rate moves from several other lenders in response to rising wholesale funding costs.
Since the turn of the year, several lenders have lifted rates out-of-cycle, including NAB and its subsidiary UBank, the Bank of Queensland (BOQ) and Virgin Money.
NAB announced increases of up to 16 basis points on its variable home loan offerings, with its subsidiary UBank also announcing increases earlier this year, lifting its fixed home loan rates by up to basis points.
The Bank of Queensland and Virgin Money have also repriced their mortgages, increasing rates earlier this month by 18 basis points and 20 basis points, respectively.
Throughout 2018, several lenders, including ANZ, the Commonwealth Bank of Australia, and Westpac, also increased rates out of cycle.
However, despite the second wave of out-of-cycle rate hikes, some lenders, including Heritage Bank, Adelaide Bank, and Teachers Mutual Bank, have reduced their home loan rates by as much as 32 basis points.