29 October, 2015
Industry super fund-owned bank ME today announced it will increase interest rates by 0.20% across its variable home loan portfolio, effective 20 November 2015.
This will put the Bank’s Flexible Home Loan variable reference interest rate at 5.08% p.a. (comparison rate 5.09% p.a.#), positioning it 0.48%-0.60% lower than the major banks as has consistently been the case over the last 10 years.
ME also announced it has increased its headline Online Savings Account variable interest rate by 0.45% to 3.55% p.a. effective Wednesday 28 October, which is one of the highest online savings account rates in the market. This includes a 1.55% p.a. variable bonus rate payable to eligible customers.*
ME CEO, Jamie McPhee, said the Bank had moved rates to provide a balance between offering competitive home loan rates to customers on the one hand, and delivering acceptable rates of return for its industry super fund shareholders and their members on the other.
“Up until the Financial System Inquiry recently addressed the unfair capital advantages of the larger banks, smaller banks like ME have been achieving below-market shareholder returns in order to remain competitive with the majors.
“Last Financial Year ME reported a return on equity of 7.4% compared to the major banks’ average of 15.8%.
“The rate increase we have announced today puts us on a path where we can continue to grow the Bank while offering some of the best home loan rates available for working Australians.
“In a period of record low interest rates, ME continues to offer lower rates than the majors as we have done for the last 10 years, giving everyday Australians a more affordable opportunity to own their own home.”
ME has a target return on equity of around 10%, which will also be achieved through productivity gains enabled by its recent technology investment.
The Bank said both revenue and cost pressures have also increased over the last 12 months due to regulatory changes around liquidity, greater economic uncertainty, and stronger competition in the owner occupied market.
Interest rates are proposed as at 29/10/2015 and subject to change. Credit criteria, terms, conditions, fees and charges apply.
#Comparison rates calculated on a loan of $150,000 for a term of 25 years, repaid monthly. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
*Online Savings Account (OSA) variable bonus interest terms and conditions To receive bonus interest on your OSA for any calendar month you must have a ME Everyday Transaction Account (ETA) and during that month make a weekly purchase with your ETA Debit MasterCardTM using tap & go. Bonus interest is only payable on balances up to $250,000 on the first OSA you open. You’re automatically eligible for bonus interest on your first OSA unless it was opened before 10/08/15, in which case you’re only eligible upon request. In any month we may without notice waive the requirement for you to meet all of these bonus interest conditions. We may change or withdraw the bonus interest offer at any time.
Australian Credit Licence 229500.