Brokers encouraged to stay connected
Customer-owned banks, including Gateway Bank and Newcastle Permanent are among the lenders increasing their variable home loan interest rates this month.
Any decision to increase rates is considered carefully and customers remain a top priority, they said.
The official cash rate went up 50 basis points in July, taking it to 1.35%. On Wednesday, the day after the RBA announcement, big four banks CBA, ANZ, NAB and Westpac announced their variable home loan rates would increase by 0.50%, in line with the cash rate rise.
Non-major banks, including Suncorp Bank, MyState Bank, ING, Bendigo and Adelaide Bank, Bankwest and AMP Bank have since followed, confirming their variable home loan rates would increase this month.
Read more: Non-major banks lift interest rates
According to RateCity.com.au on Monday, 29 lenders had announced increases to their variable interest rates, including customer-owned banks Australian Unity, Bank Australia, Bank First, Coastline Credit Union, Greater Bank and Newcastle Permanent.
Gateway Bank has confirmed its variable rate home loans will increase by 0.50% for new and existing customers. From July 12, for borrowers with an LVR up to 75%, the bank’s premium package variable rate is 3.04%. For borrowers with an LVR up to 80%, the premium package variable rate is 3.39%.
Gateway Bank head of customer operations Zeb Drummond (pictured above left) told MPA ahead of a decision to increase interest rates, the bank considered the impact on its existing members, its competitive positioning, financial impacts (such as the current and forecasted cost of funds), and operational risks.
In the current environment of rising interest rates, Drummond encouraged brokers to stay in touch with their clients.
“From a current industry perspective, we understand the frustrations facing brokers and encourage brokers to be in contact with their clients, not only through automated platforms, which are necessary, but on a personal level too,” Drummond said.
If situations arise where Gateway Bank customers are concerned about the impact of the rate increase, brokers are encouraged to talk to the bank first.
“Should a Gateway member contact a broker with concerns about rate or product we encourage the broker to reach out to us as a first port of call - we will always try and help wherever possible to ensure a good outcome is achieved for both the broker and our member,” Drummond said. “If a customer reaches out to us requesting a discharge without speaking to their broker we will try and contact the broker to let them know, so at the very least they can retain the customer, even if the loan leaves Gateway.”
Rate-focused clients who had invested in making their home energy efficient could consider Gateway Bank’s Green Plus Home Loan and Green Home Loan.
The products reward customers with a 0.25% and 0.15% discount respectively off the bank’s standard premium package home loan rate. The current interest rates are 2.99% (Green Plus Home Loan variable rate) and 3.14% (Green Home Loan variable rate).
“Going green could not only help customers reduce their total interest payable but could also help them reduce their impact on the environment,” Drummond said.
Read more: RBA goes hard on interest rates
Newcastle Permanent has confirmed its variable home loan rates and business loan rates will increase by up to 0.50% for new and existing customers from July 15. The bank has also announced increases to interest rates across a range of its deposit products, including its Smart Saver account, Special Monthly Interest account and term deposit offers.
The decision to pass on the increase to its 45,000 home loan customers was necessary to maintain a competitive position, while ensuring the bank offered the best possible outcome to all its customers, Newcastle Permanent CEO Bernadette Inglis said.
Newcastle Permanent chief customer and product officer James Cudmore (pictured above right) said over almost 120 years in business, the bank had never wavered from its purpose to help Australians own their own home. As the country faced renewed economic headwinds and rising interest rates, the bank was “absolutely committed” to maintaining that purpose, he said.
“There’s no doubt that we’re heading into a different economic environment than what we were facing even 12 months ago. However, what hasn’t changed is our desire to help our customers own their home faster and achieve their financial goals,” Cudmore said.
Its home loans were generally structured so customers could choose to pay off more than the minimum payment, or build up some advance on their home loan, he said.
“Over 90% of our customers are ahead in their home loan repayments, which is among the highest in the industry and evidence for how we help people own a home sooner,” Cudmore said.
Newcastle Permanent home loan products offer customers flexibility around their repayments, such the ability to make lump sum payments to pay off their loan sooner. Additionally, some of the bank’s variable rate loans provide extra features that many customers find helpful. These include an interest offset account and a redraw facility.
“Our fixed rate home loans also have the ability for our customers to make both regular and lump sum additional repayments at any time up to $25,000 p.a. This helps our customers get ahead on their home loan,” Cudmore said.
“We encourage our broker partners to speak to us directly so together we can ensure our customers have the right home loan, savings or deposit account for their individual needs.”
