Have you seen the interest rate on your loan?


You may have seen recent changes to the interest rate on your home loan. These changes are in relation to both owner occupied and investment loans.


Why is this happening?

The financial regulators have placed pressure on the Banks to reduce the proportion of interest only loans on their books. Currently, this sits at about 40% of all loans. The goal is to reduce this type of lending to around 30%.

Whilst the Banks are seeking to cut the share of interest only lending, there is also an overriding focus to use interest rates and credit policy to protect borrowers against risks in the housing market and improve their overall financial position.


What does that mean?

Over the last 6 months, some Banks have reduced their interest rates on Principal and interest home loans. At the same time, the rates on interest only loans have increased. They are adopting a more cautious approach to credit policies and are being more responsible with their lending practices. Loan affordability for you the borrower has become more difficult.
 
Changes in interest rates can be explained in the matrix below, using the standard variable rate (prior to any customer discount):


 


So what are your options?

  • Fix the interest rate on your loan
  • Restructure your repayments from interest only to Principal and Interest
  • Refinance to another Financial Institution
  • Do nothing and be subject to movements in interest rates


Please contact our office on 03 9940 2608 to discuss your situation and explore what options are available to you. 

*The interest rates represented on this page are for comparison purposes and any application made to a new Bank will be subject to credit assessment.