It’s been a busy time for the big four banks. Over the past week, Commonwealth, Westpac, ANZ and NAB have all made announcements relating to interest rates for variable home loans. Westpac was first to announce that they were increasing their variable rate by +0.14% effective from Wednesday 19th September 2018. Shortly after, CBA announced an increase of +0.15% to all of their variable home loans, effective from 4th October, and ANZ will increase their variable rate by +0.16% effective from 27th September. Whilst the RBA has kept the official cash rate at 1.5% for 25 months now, the banks have increased their rates due to a rise in wholesale funding costs.
Whilst it was expected that NAB would follow, they have decided to keep their standard variable rate at 5.24% as a way to thank customers for their loyalty in banking with them.
How do the recent interest rate rises affect my loan repayments?
With an interest increase of 14 basis points (.14%) a family with a $300,000 home loan will fork out an extra $35 in interest per month while Aussies with a $500,000 home loan will spend an extra $516 a year on interest. You can also use our repayment calculators to work out the new repayments for your loan. It’s important to note that if you are currently making an additional repayment amount to your loan, your repayments will not change. However, less of this payment will be seen as an additional amount. If your repayment method is direct debit, your bank should automatically reflect the new repayment amount, but if you manually transfer funds on your payment due date, you will need to update your repayment details. Speak to your bank if you are unsure.
Fixed and split home loans
If your loan doesn’t have a fixed portion and is purely variable, you have the option to change, and it’s always good to look elsewhere. However, split or fixed loans are more restrictive and can be costly to leave during the fixed term. It’s always best to speak to a broker or your bank if switching loans is something you’re considering. They’ll assess your situation and talk you through your options.
The big 4 banks will provide a range of products with varying discounts on their standard variable rates, it is best to speak to a broker to check your loan structure and the discount is the most suitable for your situation.
Credit Representative 510598 is authorised under Australian Credit Licence 389328.
Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.