Changes to interest-only home loans

30 June 2017

ME today announced several changes across its home loan portfolio.

The Bank will decrease by 10 basis points its principal-and-interest variable home loan offer to new owner-occupier borrowers who are applying for a loan in a member package valued at $150,000 or more and with an LVR at 80% or less.

It will also increase by 40 basis points, all interest-only variable and fixed home loan offers to new borrowers.

Both these changes are effective Saturday 1 July.

ME will also increase by 40 basis points its reference rates on all existing variable interest-only loans. This change will affect existing customers in August.

The bank said the changes were being made to manage regulatory requirements on interest-only lending.

ME CEO, Jamie McPhee, said “the changes are necessary to ensure the Bank complies with macro-prudential measures introduced by APRA, while encouraging existing interest-only home loan borrowers to switch to principal-and-interest.

“Owner-occupier principle-and-interest home loan rates are at record lows. Now is a great time to pay down the principal on your home loan.

“ME does not apply a fee for switching from interest only to principal-and-interest,” he said.