04-Aug-2016 • Corporate
ME today announced it will decrease interest rates on its variable home loan products by 0.10%, following the RBA’s recent decision to cut the cash rate by 0.25%.
The decrease will be effective 23 August and will put the Bank’s Flexible Home Loan variable reference rate at 4.93% p.a. (comparison rate 4.95% p.a.#), positioning it between 0.29%-0.36% p.a. lower than the major banks.
ME said it retained some of the RBA’s cash rate cut to offset significant increases in other costs of doing business.
“The cost of retail deposits as a source of funding for loans has increased significantly over the last nine months,” said ME CEO, Jamie McPhee.
“Retail deposit costs will increase further over the next 18 months as banks meet new legislation that require them to source more funds for loans from longer-term retail deposits, driving up market demand.
“This is particularly true for ME, which has always maintained deposit rates near the top of the market.
“The cost of funding from money markets – ‘term securitisation’ and ‘warehousing’ – has also risen sharply.
“Like any business, banks need to adjust their prices when input costs rise and we believe our decision strikes the right balance between the cut to the cash rate and rising funding costs.
“ME customers will continue to receive one of the lowest standard variable interest rates in the market, while we maintain a fair return for our industry super fund shareholders and their members.”
| |
Post-cut rate* |
Variation from
ME's post-cut rate |
| ME |
4.93 |
NA |
| CBA |
5.22 |
-0.29 |
| ANZ |
5.25 |
-0.32 |
| NAB |
5.25 |
-0.32 |
| Westpac |
5.29 |
-0.36 |
| |
|
0.32% (average) |
*Standard variable owner occupied home loans
-ends-
Interest rates are proposed as at 4/8/2016 and subject to change. Terms and conditions are available on request. Fees and charges may apply. Applications are subject to credit approval. Australian Credit Licence 229500. #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.