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Home loan rate changes announced

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SERVICE ONE has announced changes to home loan interest rates that will impact some existing borrowers. Interest-only loans will now be priced differently to principal and interest loans. 

This follows restrictions that were put in place by the regulator earlier in the year for interest only loans and capping the percentage of these types of loans in the broader lending portfolio as well as restrictions around investment lending growth.
As such, interest-only variable rate loans for owner occupied purposes will increase by 30-basis points and interest-only variable rate loans for investment purposes will increase by 40-basis points.

The General Manager of Banking for SERVICE ONE, Tony Brown, sheds some light on these changes.

"As the SERVICE ONE loan portfolio is part of Bendigo Bank’s balance sheet, we need to ensure our interest-only lending exposure remains below the regulator’s expectations and control investor loan growth. One of the most effective ways to do this is through pricing," Mr Brown explains.
Despite the changes, SERVICE ONE home loan options remain competitive.

"It’s important to look at this from a broader perspective. Many of the larger lenders have had separate pricing for interest-only loans for a while now. And because we tier our Standard Variable product with loans over $50k eligible for a discount, our variable rate loans remain some of the most competitive, fully-featured products on the market."

As part of these changes, SERVICE ONE has decreased a number of fixed rate options for principal and interest loans as well as variable rate principal and interest loans for investment purposes for new lending.

The following changes will take effect Monday 17 July 2017 and will be applied to existing loan products from this date:

Owner occupied purposes (interest only)

Loan type Old rate (% p.a.) New rate (% p.a.) Change
Standard Variable (index rate) 5.10 5.40 +0.30
- for loans under $50k 5.10 5.40 +0.30
- for loans between $50k and $249,999 4.60 4.90 +0.30
- for loans between $250k and $499,999 4.45 4.75 +0.30
- for loans over $500k 4.35 4.65 +0.30
Base Variable 4.70 5.00 +0.30
Pioneer Banking Package ($200k - $499,999) 4.50 4.80 +0.30
Pioneer Banking Package ($500k or more) 4.35 4.65 +0.30

Investment purposes (interest only)

Loan type Old rate (% p.a.) New rate (% p.a.) Change
Standard Variable (index rate) 5.60 6.00 +0.40
- for loans under $50k 5.60 6.00 +0.40
- for loans between $50k and $249,999 5.10 5.50 +0.40
- for loans between $250k and $499,999 4.95 5.35 +0.40
- for loans over $500k 4.85 5.25 +0.40
Base Variable 5.20 5.60 +0.40
Pioneer Banking Package ($200k - $499,999) 5.00 5.40 +0.40
Pioneer Banking Package ($500k or more) 4.85 5.25 +0.40

Members with loans affected by these changes will receive correspondence confirming the change and how it impacts them.

Borrowers who are in a position to move from interest-only repayments to principal and interest repayments are encouraged to contact SERVICE ONE. 

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