More non-majors slice interest rates

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Bank of Queensland, ME and Virgin Money are the latest lenders to announce home loan interest rate reductions following the Reserve Bank’s decision to cut the cash rate to 1.5%.

BOQ has announced variable home loan rates for owner occupiers will reduce by 0.15% with rates for investors reducing by 0.10%. 

The Queensland-based lender has also reduced its three-year fixed rates for owner occupiers and investors to 3.59% and 3.79% respectively.

“Today’s decision takes our mortgage rates to new lows and provides our savings customers with some of the most competitive term deposit rates on the market today,” CEO and managing director, Jon Sutton said.

BOQ’s new rates will be available from 31 August.

ME has also decreased interest rates on its variable home loan products by 0.10%. The decrease will be effective 23 August and will put the bank’s Flexible Home Loan variable reference rate at 4.93%.

ME said it retained some of the RBA’s cash rate cut to offset significant increases in other costs of doing business.

“The cost of retail deposits as a source of funding for loans has increased significantly over the last nine months,” said ME CEO, Jamie McPhee.

“Retail deposit costs will increase further over the next 18 months as banks meet new legislation that require them to source more funds for loans from longer-term retail deposits, driving up market demand.

“The cost of funding from money markets – ‘term securitisation’ and ‘warehousing’ – has also risen sharply.”

Finally, Virgin Money has announced it will pass the full cash rate cut onto customers, slashing all of its Reward Me owner occupied variable home loan rates by 0.25%. Virgin Money’s lowest owner occupied home loan rate will fall to 3.69%.

Meanwhile, interest rates for investors will be reduced by 0.20%, with Virgin’s lowest variable rate for investors dropping to 3.99%.

The new rates will be effective from next week, Monday 8 August. 

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