ME drops variable home loan rate to below 4 percent

Home loan lender, ME, has announced a range of interest rate cuts across variable and fixed rate products.

It included introducing a variable rate below 4 percent for new owner occupier with a maximum LVR of 80 percent.

The variable rate for new owner occupier loans has been discounted by 6 basis points to 3.95 percent. This is an 88 basis point discount off the reference rate for the life of the loan.

The variable rate on its investment Flexible Home Loan with Member Package has been reduced by 9 basis points to 4.15 percent. This is a 68 basis point discount off the reference rate.

The non-major has also cut its one and two-year fixed rates by 30 basis points on its Flexible Home Loan for owner occupiers to 3.99 percent.

The four and five-year fixed rates have been cut by 10 basis points to 4.49 percent.

For investors, the Flexible Home Loan has been discounted by 20 basis points on its one and two-year fixed rates, to 4.09 percent, effective yesterday.

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Following the Reserve Bank of Australia’s decision to cut the cash rate in May, demand for variable rate mortgages has risen, according to Mortgage Choice’s latest national home loan approval data.

Variable rate home loans accounted for 76% of all loans written in May – up from 75% the month prior.
 
“After the Reserve Bank’s decision to cut the cash rate at its May Board meeting, three of the four majors passed on the full rate cut – trimming their variable rates by 25 basis points,” Mortgage Choice chief executive officer John Flavell said.
 
“With that in mind, it was hardly surprising to see a lift in demand for variable rate products this month. Borrowers are clearly looking to take advantage of the historically low rate environment.
 
“And, with many economists predicting at least one more rate cut this calendar year, I wouldn’t be surprised to see demand for variable rate products remaining strong for the foreseeable future.”
 
Across the country, demand for variable rate products was highest in Victoria, with this type of product accounting for 86% of all loans written in May.
 
Variable rate demand was lowest in New South Wales, with this type of product accounting for 71.47% of all loans written.