Variable mortgage rates on the way up

A number of lenders have announced increases to their variable mortgage rates over the past month, citing funding cost pressure as the reason for the changes.

According to the latest Mozo Banking Roundup, Auswide, Citibank, ING, Bank of Queensland, AMP Bank, Beyond Bank, QBank, Heritage and IMB put up rates last month.

Auswide Bank increased its owner-occupier variable rates by five basis points and its investor variable rates by 13 basis points.

Citibank and ING have increased variable rates by 10 bps. Beyond Bank and QBank added six bps to their variable rates. Heritage Bank raised rates on all loan types by five bps.

Bank of Queensland put up the rate on owner-occupier principal and interest loans by nine bps and put up the rate on all other loans by 15 bps.

AMP Bank has increased owner-occupier interest-only rates for new customers by 40 bps.

IMB took the unusual step of withdrawing its package loans from the market. It also added eight bps to owner-occupier and investor variable rates.

These changes follow mortgage rate increases by Suncorp, ME and MyState since March.

Rates on fixed interest loans also rose, with Westpac and its subsidiaries increasing some rates by up to 15 bps.

The lowest variable rate loan in the market is 3.39 per cent, which BIDeloan is offering on its SMARTeloan product.

The rate leaders in the fixed rate segment are Greater Bank, which is offering 3.49 per cent for one year; IMB Bank, offering 3.65 per cent for two years; Community First and easy Street – 3.69 per cent for three years; Freedom Lend and ING, with 3.92 per cent for four years; and ING, offering 3.98 per cent for five years.

Among the big banks, ANZ’s best package variable rate is 4.3 per cent, while it is offering 3.99 per cent on a three-year fixed rate package.

Commonwealth Bank is offering 4.52 per cent for a package variable rate mortgage and 3.99 per cent for three years fixed.

National Australia bank is offering 4.34 per cent for a package variable rate and 3.94 per cent for three years.

Westpac is offering 4.34 per cent for a package variable rate and 3.99 per cent for three years.

Rate City has estimated that as many as 362,800 home loan customers will have to make higher repayments from this month.

It says most of the increases have been in the variable rate segment, raising the prospect of a switch to fixed rates.