PROPERTY

ME Bank reduces principal-and-interest home loan rates

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ME Bank is the latest lender to decrease principal-and-interest mortgage rates while hiking rates on interest-only borrowers.

The bank announced on Friday it would decrease its principal-and-interest variable home loan offer by 10 basis points for new owner-occupier borrowers who are applying for a loan in a member package valued at $150,000 or more and with an LVR at 80% or less.

It will also increase all interest-only variable and fixed home loan offers to new borrowers by 40 basis points.

me bank moves interest rates

The changes, which the bank attributes in response to regulatory requirements on interest-only lending, will come into effect tomorrow.

CEO Jamie McPhee says the changes "are necessary to ensure the bank complies with macro-prudential measures introduced by APRA, while encouraging existing interest-only home loan borrowers to switch to principal and interest".

"Owner-occupier principle-and-interest home loan rates are at record lows," he says. "Now is a great time to pay down the principal on your home loan."

He is encouraging customers to switch to owner-occupier principal-and-interest loans while rates are "at record lows".

McPhee says the bank does not charge customers a fee for switching their home loan from interest-only to principal and interest.

The changes come into effect from July 1.

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Sharyn McCowen is Money's online producer. She has a degree in journalism from Charles Sturt University, and was a newspaper reporter before moving to magazines and finance.
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